BKE
BKE
Hold 2026-03-19
Model
DDM
Price at Report
$49.09
Base IV
$54.27
Bear IV
$44.75
Bull IV
$65.31
Entry Zone: 47-50 · Sell Above: 56
Bore Family Office
Valuation Report — The Buckle, Inc. (BKE) • March 19, 2026
3-Stage DDM (Ke) • Discount Rate: 10.38% • Current Price: $49.09
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
The Buckle, Inc. is a specialty apparel retailer operating ~450 stores across 42 US states, focused on casual denim, tops, sportswear, outerwear, accessories, and footwear for young men and women. The company differentiates through a curated mix of national brands and proprietary labels (BKE, Buckle Black, Ace High), personalized guest services including free alterations, and a strong presence in mid-tier and smaller US markets where competition from fast fashion is less intense.
BKE has returned to strong comparable store sales growth (+6.6% in FY2025) driven by women's denim trends and Western fashion momentum. The company operates a capital-light model with no financial debt, generates ~$200M+ in annual FCF, and returns virtually all cash to shareholders via regular dividends ($1.40/yr) plus large special dividends ($2.85-$3.35/yr). Management plans to open 12-14 new stores and remodel 12-14 existing stores in FY2026.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Women's Apparel | $630M | 49% | +8.0% | — | Denim, tops, dresses, outerwear; driven by Western/denim fashion trend |
| Men's Apparel | $500M | 38% | +4.0% | — | Denim, tops, sportswear; stable but slower growth |
| Accessories & Footwear | $168M | 13% | +7.0% | — | Handbags, jewelry, fragrances, boots; higher margin category |
| Blended Growth Rate | — | 100% | +6.3% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 45.2% | ≥12% strong |
| FCF Margin | 16.2% | ≥10% strong |
| Debt / EBITDA | 0.0x | ≤2x conservative |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Neutral | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $1,295 | $1,345 | $1,261 | $1,218 | $1,298 |
| EBITDA ($M) | $354 | $347 | $292 | $264 | $261 |
| Operating Income ($M) | $336 | $328 | $271 | $241 | $261 |
| Net Income ($M) | $255 | $255 | $220 | $195 | $210 |
| EPS (diluted) | $5.16 | $5.13 | $4.40 | $3.89 | $4.14 |
| Free Cash Flow ($M) | $293 | $212 | $217 | $200 | $210 |
| Annual DPS | $7.340 | $4.400 | $4.250 | $4.250 | $4.750 |
| Total Debt ($M) | $288 | $304 | $315 | $326 | $384 |
| Rev YoY Growth | — | +3.9% | -6.2% | -3.4% | +6.6% |
| Gross Margin | 50.4% | 50.3% | 49.1% | 48.7% | 49.0% |
| EBITDA Margin | 27.3% | 25.8% | 23.2% | 21.7% | 20.1% |
| Operating Margin | 25.9% | 24.4% | 21.5% | 19.8% | 20.1% |
| Net Margin | 19.7% | 19.0% | 17.4% | 16.0% | 16.2% |
⚙️ Ke (DDM)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.30% | 10-yr US Treasury yield |
| Beta (β) | 1.106 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 10.38% | Ke = Rf + β × ERP |
📈 DDM Scenarios
$45
🔴 Bear
$54
📊 Base
$65
🚀 Bull
$49.09
Current Price
$53
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 1.0% | 0.5% | 2.0% | 10.38% | $45 | ▼8.8% |
| 📊 Base | 3.5% | 2.5% | 2.5% | 10.38% | $54 | ▲10.6% |
| 🚀 Bull | 6.0% | 4.0% | 3.0% | 10.38% | $65 | ▲33.0% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 1.0% | Stage 2: 0.5% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $4.040 | $3.660 | $3.66 |
| Year 2 | Stage 1 | $4.080 | $3.349 | $7.01 |
| Year 3 | Stage 1 | $4.121 | $3.064 | $10.07 |
| Year 4 | Stage 1 | $4.162 | $2.804 | $12.88 |
| Year 5 | Stage 1 | $4.204 | $2.566 | $15.44 |
| Year 6 | Stage 2 | $4.225 | $2.336 | $17.78 |
| Year 7 | Stage 2 | $4.246 | $2.127 | $19.91 |
| Year 8 | Stage 2 | $4.267 | $1.937 | $21.84 |
| Year 9 | Stage 2 | $4.289 | $1.763 | $23.61 |
| Year 10 | Stage 2 | $4.310 | $1.605 | $25.21 |
| Terminal | — | TV=$52.46 | PV(TV)=$19.54 (44% of IV) | $44.75 |
| Intrinsic Value | — | — | PV(Divs) $25.21 + PV(TV) $19.54 | $44.75 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (10.38%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $52.46. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $19.54). Intrinsic value = PV of all dividends ($25.21) + PV of terminal value ($19.54) = $44.75 per share.
Base Scenario
Stage 1: 3.5% | Stage 2: 2.5% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $4.140 | $3.751 | $3.75 |
| Year 2 | Stage 1 | $4.285 | $3.517 | $7.27 |
| Year 3 | Stage 1 | $4.435 | $3.298 | $10.57 |
| Year 4 | Stage 1 | $4.590 | $3.092 | $13.66 |
| Year 5 | Stage 1 | $4.751 | $2.899 | $16.56 |
| Year 6 | Stage 2 | $4.870 | $2.692 | $19.25 |
| Year 7 | Stage 2 | $4.991 | $2.500 | $21.75 |
| Year 8 | Stage 2 | $5.116 | $2.322 | $24.07 |
| Year 9 | Stage 2 | $5.244 | $2.156 | $26.23 |
| Year 10 | Stage 2 | $5.375 | $2.002 | $28.23 |
| Terminal | — | TV=$69.92 | PV(TV)=$26.04 (48% of IV) | $54.27 |
| Intrinsic Value | — | — | PV(Divs) $28.23 + PV(TV) $26.04 | $54.27 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (10.38%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $69.92. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $26.04). Intrinsic value = PV of all dividends ($28.23) + PV of terminal value ($26.04) = $54.27 per share.
Bull Scenario
Stage 1: 6.0% | Stage 2: 4.0% | Terminal: 3.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $4.240 | $3.841 | $3.84 |
| Year 2 | Stage 1 | $4.494 | $3.689 | $7.53 |
| Year 3 | Stage 1 | $4.764 | $3.542 | $11.07 |
| Year 4 | Stage 1 | $5.050 | $3.402 | $14.47 |
| Year 5 | Stage 1 | $5.353 | $3.267 | $17.74 |
| Year 6 | Stage 2 | $5.567 | $3.078 | $20.82 |
| Year 7 | Stage 2 | $5.790 | $2.900 | $23.72 |
| Year 8 | Stage 2 | $6.021 | $2.733 | $26.45 |
| Year 9 | Stage 2 | $6.262 | $2.575 | $29.03 |
| Year 10 | Stage 2 | $6.513 | $2.426 | $31.45 |
| Terminal | — | TV=$90.89 | PV(TV)=$33.86 (52% of IV) | $65.31 |
| Intrinsic Value | — | — | PV(Divs) $31.45 + PV(TV) $33.86 | $65.31 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (10.38%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $90.89. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $33.86). Intrinsic value = PV of all dividends ($31.45) + PV of terminal value ($33.86) = $65.31 per share.
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.4% | $66 | $69 | $73 | $77 | $82 |
| 8.9% | $62 | $64 | $67 | $70 | $74 |
| 9.4% | $58 | $60 | $62 | $65 | $68 |
| 9.9% | $54 | $56 | $58 | $60 | $63 |
| 10.4% | $51 | $52 | $54 | $56 | $58 |
| 10.9% | $48 | $49 | $51 | $52 | $54 |
| 11.4% | $46 | $47 | $48 | $49 | $51 |
| 11.9% | $43 | $44 | $45 | $47 | $48 |
| 12.4% | $41 | $42 | $43 | $44 | $45 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | P/E (TTM) | EV/EBITDA | Div Yield | Gross Margin | Note |
|---|---|---|---|---|---|
| BKE (current) | 11.9x | 9.6x | 8.96% | 49.0% | Highest yield; zero debt; special divs |
| BKE (5yr avg) | 9.5x | 7.5x | ~9% | 49% | Trading above own avg on comp store recovery |
| ANF (Abercrombie) | 14.2x | 8.1x | 0% | 65% | Peer recovery play; higher margins, no dividend |
| AEO (Am Eagle) | 12.8x | 6.5x | 3.2% | 38% | Lower margins; more promotional |
| URBN (Urban) | 15.5x | 9.2x | 0% | 32% | Multi-banner; lower margin; no dividend |
| GPS (Gap) | 8.5x | 5.8x | 2.8% | 48% | Turnaround story; higher risk |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $4.750 |
| Current Yield | 8.96% |
| Consecutive Growth Years | 0 |
| 1-yr DPS CAGR | +11.8% |
| 3-yr DPS CAGR | +2.7% |
| 5-yr DPS CAGR | +-8.3% |
| 10-yr DPS CAGR | +8.0% |
| Payout Ratio (DPS/EPS) | 115.0% ⚠️ |
| FCF Payout Ratio | 115.0% ⚠️ |
| Sustainability Verdict | ⚠️ Watch — Specials Are Discretionary |
BKE's regular dividend of $1.40/yr ($0.35/qtr) has been flat since FY2022 and is rock-solid at a 34% payout ratio (regular DPS / EPS = $1.40 / $4.14). However, the bulk of shareholder returns comes from discretionary special dividends that vary year to year ($2.85–$3.35 recently, $6.00 in FY2021). Including specials, the total payout ratio is ~115% of earnings — funded partly from the $274M cash balance.
The special dividends are sustainable as long as FCF remains above $200M/yr and the balance sheet stays debt-free. The risk is that specials could be reduced or eliminated in a downturn without any impact on the regular dividend. For DDM purposes, we use FCF/share ($4.00) as the distributable cash flow base rather than total DPS.
The special dividends are sustainable as long as FCF remains above $200M/yr and the balance sheet stays debt-free. The risk is that specials could be reduced or eliminated in a downturn without any impact on the regular dividend. For DDM purposes, we use FCF/share ($4.00) as the distributable cash flow base rather than total DPS.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $5.16 | — | — | — | Actual |
| 2022 | $5.13 | — | — | — | Actual |
| 2023 | $4.40 | — | — | — | Actual |
| 2024 | $3.89 | — | — | — | Actual |
| 2025 | $4.14 | — | — | — | Actual |
| 2026 | $4.12 | $4.12 | $4.12 | 1 | Estimate |
| 2027 | $3.82 | $4.12 | $4.46 | 3 | Estimate |
| 2028 | $4.46 | $4.60 | $4.78 | 2 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $1.3B | — | — | — | Actual |
| 2022 | $1.3B | — | — | — | Actual |
| 2023 | $1.3B | — | — | — | Actual |
| 2024 | $1.2B | — | — | — | Actual |
| 2025 | $1.3B | — | — | — | Actual |
| 2026 | $1.3B | $1.3B | $1.3B | 1 | Estimate |
| 2027 | $1.3B | $1.3B | $1.4B | 3 | Estimate |
| 2028 | $1.4B | $1.4B | $1.5B | 2 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $53.00 | Range $53–$53
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Mauricio Serna | UBS | Hold | $53 | +8.0% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|---|---|---|---|---|
| Q4 FY2025 | $1.59 vs $1.53 | +$0.06 ✅ | $0.4B vs $0.4B | +$0.0B ✅ | None provided |
| Q3 FY2025 | $0.96 vs $0.94 | +$0.02 ✅ | $0.3B vs $0.3B | +$0.0B ✅ | None provided |
| Q2 FY2025 | $0.86 vs $0.84 | +$0.02 ✅ | $0.3B vs $0.3B | +$0.0B ✅ | None provided |
| Q1 FY2025 | $0.73 vs $0.70 | +$0.03 ✅ | $0.3B vs $0.3B | +$0.0B ✅ | None provided |
💡 Investment Thesis
- Capital-Light Cash Machine: BKE generates $200M+ FCF annually on $1.3B revenue with zero financial debt and $274M cash on hand. The company returns virtually 100% of FCF to shareholders — a rare trait in specialty retail.
- Denim/Western Fashion Tailwind: Women's denim and Western fashion trends are driving comp store growth of 6-9% and online sales growth of 13%+. BKE's curated assortment and private label capabilities position it well for this cycle.
- Undervalued Relative to Peers: At 12x P/E with 9% total yield (regular + special dividends), BKE trades at a significant discount to specialty retail peers despite superior margins (49% gross, 20% operating) and no leverage.
- Expansion Optionality: 12-14 new stores planned in FY2026 and growing e-commerce channel (13.6% online growth in Q3) provide revenue growth levers beyond comp store performance.
- Key Risk — Fashion Cyclicality: BKE's strength in denim and Western wear is trend-dependent. A shift in fashion preferences could reverse comp store momentum. Thin analyst coverage (1 analyst) and small-cap status add liquidity risk.
⚖️ DDM Verdict: Hold — The Buckle, Inc. (BKE)
Current price: $49.09 | Analyst Avg PT: $53.00
$45
🔴 Bear
$54
📊 Base
$65
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$50 | Begin position |
| Tier 2 — Add | ≤$50 | Add on weakness |
| Tier 3 — Full | ≤$47 | Full allocation |
| Sell Alert | ≥$56 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
BKE at $49 is an Accumulate with a Base DDM target of ~$53. The stock trades at just 12x trailing earnings with a 9%+ total distribution yield, zero financial debt, and strong comp store momentum. The risk/reward is attractive: downside to Bear case (~$35) is limited by the substantial cash position and zero-debt balance sheet, while upside to Bull case (~$75) captures market share gains and fashion cycle extension.
Action: Accumulate below $50. Full position at $44-45 (10x earnings). Trim above $65 (approaching Bull territory). The special dividend in January each year provides a natural yield floor.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| DPS Base | Used FCF/share of $4.00 as DDM base (normalized from ~$200M FCF / 50.7M shares). BKE distributes virtually 100% of FCF via regular ($1.40/yr) plus special ($2.85-$3.35/yr) dividends. Per PM-type methodology: for high-payout stocks, use FCF/share as distributable base rather than DPS to avoid double-counting the variable special component. |
| Ke | Beta 1.106 (Finnhub). Rf=4.30% (10yr UST Mar 2026), ERP=5.5%. Ke=4.30% + 1.106 × 5.5% = 10.38%. No premium added — BKE has zero financial debt and strong cash generation, partially offsetting small-cap/retail cyclicality risk embedded in the higher beta. |
| Sanity Check | Base IV ~$53 vs sole analyst PT $53 (UBS) — dead-on. Limited analyst coverage means sanity check is less robust than for well-covered names. Cross-checked with Gordon Growth: $4.00 × 1.025 / (0.1038 - 0.025) = $52.03 — consistent. |
| Terminal Growth | Base gT=2.5% — BKE is a mature retailer with limited long-term growth ceiling. Revenue has oscillated between $1.2-1.35B over 5 years. Bear gT=2.0% (secular retail headwinds). Bull gT=3.0% (assumes permanent market share gains in denim). |
| Special Dividends | BKE's special dividends are discretionary but have been paid every year since 2011. They function as a de facto capital return policy — management pays out excess cash rather than accumulating it. Modeling these as part of distributable cash flow is appropriate given the 15-year track record of payments. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.