$35.53
$75.55
bear $35.53
base $59.64
bull $75.55
margin of safety $27.00
market price* $46.50
Buckle sells casual apparel, mainly denim, to young adults from about 446 leased stores in regional malls and outlet centers across 42 states, plus its website, run from Kearney, Nebraska. It carries no borrowings, so there is nothing for lenders ahead of shareholders; its only fixed obligations are store leases, whose rent already runs through the cash flow we value. Officers and directors own a large share of the company, and nearly all surplus cash is paid out as a $0.35 quarterly dividend plus a special dividend each winter. Over the last three years dividends paid were $197M, $198M and $225M. How we measure earnings. We start from cash generated by operations, strip out swings in inventory and payables, charge stock compensation as a real cost, and subtract the capital spending needed to keep the stores in shape. Because Buckle's revenue has been flat to slightly up, almost all of its capital spending (rising from $7M in fiscal 2019 to $45M in fiscal 2025 as it remodels and relocates stores) is treated as upkeep rather than growth. On that basis owner earnings were about $98M-$120M a year in fiscal 2016-2019 ($2.02-$2.45 a share), jumped to $262M ($5.31) in the fiscal 2021 stimulus boom, and have since settled at $246M, $203M, $178M and $193M ($4.96, $4.07, $3.53, $3.80 a share) in fiscal 2022-2025. Net income checks to these figures exactly once depreciation, deferred taxes and upkeep spending are accounted for. The earnings level. We use the median of fiscal 2022-2025, about $198M a year, or roughly $3.90 a share. We leave out fiscal 2020 and 2021 because shutdowns and stimulus distorted them, and leave out the years before 2020 because the business was then a different one: gross margin was about 41% versus 47-49% now, mainly because private-label brands (BKE, Buckle Black, Ace High, Daytrip and others) rose to about 47% of sales and carry higher margins than branded goods. That mix has now held for five years. Owner earnings rose about 8% in the most recent year; the base case assumes no growth from here, so it starts below that trailing rate. The first half of fiscal 2026 was stronger again (operating income $115M versus $100M a year earlier, sales $609M), which supports the level without our raising it. Two one-off items are left out of the earnings level: a $19.1M interchange-fee litigation settlement received in March 2026, and any refund of 2025 import tariffs following the February 2026 Supreme Court ruling, which the company says is uncertain in amount and timing. Base case: owner earnings hold around $198M a year for ten years, with comparable sales roughly flat, private-label mix steady and store count roughly flat, then decline about 2% a year after that as mall traffic continues its long erosion. No growth is credited: store count has not grown in a decade and private-label gains are not something we can count on to continue. The business is worth about $2.81 billion, it owes nothing, and with about $230M of cash and short-term investments beyond its working needs the shares are worth about $59.64. Bear case: a downturn of the kind specialty mall apparel went through in 2015-2019, when Buckle's sales fell 23% from $1.15B to $885M and owner earnings fell to roughly $100-115M, combined with a partial retreat of private-label margins. Owner earnings fall to $180M, $145M, then about $110-115M by year three, recover only to about $120M, and then decline 4% a year after year ten. Two named risks feed this: one private-label denim maker, Axis Denim, accounted for 20.6% of fiscal 2025 sales, and the company has no long-term contracts with any supplier. The business is worth about $1.58 billion, owes nothing, and the shares come to about $35.53. Even at the bottom of this case the company stays profitable and debt-free, so there is no refinancing or dilution risk. Bull case: the higher-margin mix and the store remodel program keep working, and owner earnings start near $215M (close to the fiscal 2022-2023 average) and grow about 1.5% a year, roughly the pace of modest price increases the company has demonstrated, before slowly fading after year ten. The business is worth about $3.62 billion, owes nothing, and the shares come to about $75.55. Margin of safety price. We are reasonably sure of the earnings level: the business is simple, cash generation tracks reported profit exactly, and it has no debt. What we are least sure of is whether the step-up in margins since 2020 is permanent; if margins went back to pre-2020 levels earnings would be roughly half today's, which is the bear case. The worst plausible outcome no case fully models is losing Axis Denim or a sudden shift in denim fashion away from Buckle's assortment at the same time as a recession; because the company owes nothing and its leases roll over a few years at a time, it would survive that, but earnings and the special dividend could be cut sharply for several years. If we are wrong on both margins and mall traffic, the shares are worth about the bear value in the mid-30s. Over the holding period, the company pays out nearly everything it earns: at normal earnings that is close to $3.90 a share a year, and even in the bear case it pays out $2-3 a share. At $27 a share the normal payout alone implies about 14% a year, and reaching even the bear value within a few years would imply the rest of a 20% annual return; at higher prices the target depends on the margin structure holding. The margin-of-safety price is $27.