The Buckle, Inc. (NYSE:BKE) is a fashion retailer and selling clothing, footwear, and accessories for young men and women. The company operates 463 stores in 44 US states, under the names Buckle and The Buckle.
The company generates a very healthy level of operating profit. Although the shares have been absolutely slammed in large measure because of slowing topline growth. The company is able to generate increased profitability in spite of lower revenue.
The company generates an operating yield over the past four quarters of about 72%. We’re looking for a yield of about 10% greater than the risk free rate. Since the current 10 year treasury bond is priced to yield ~2.2%, we’re looking for retail related investments that can generate an operating profit yield of ~12%. In this regard, The Buckle certainly does not disappoint as we mentioned its operating yield.
So considering the overall fundamental outlook, it looks like a good choice for long term call options.