While the broader market indices sold off on Monday, shares of Boot Barn Holdings (BOOT) bucked that trend by rising a modest 0.33% on relatively light trading.

Shares of the California-based retailer closed the trading day at $18, or $0.06 over last Friday’s closing price of $17.94.

Interestingly, the stock price moved higher without a corresponding increase in volume.

Monday saw more than 179,000 shares trade hands, compared to the company’s 90-day average trading volume of just over 336,000 shares.

Now, Boot Barn has retraced most of its gains since reaching a high of $23.12 on December 8, 2014. But the stock is still up since going public on October 30, 2014.

And it’s easy to see why the stock is up from its IPO…

Boot Barn bills itself as the nation’s largest retailer of western and work-related footwear, apparel, and accessories. It sells brands such as Wrangler, Shyanne, and Miss Me at its locations throughout the Southwest.

And a look at the company’s Q2 FY 2015 reports indicate that the company has a bold plan to grow its market share – despite widespread retail headwinds.

No Growing Pains Here…

At a time when many retailers are slowing their growth plans, Boot Barn plans to magnify its reach through acquisitions and new store openings.

It aims to increase its store count by more than 10% annually for the near future, while also beginning its long-awaited plans to expand nationwide.

Boot Barn has expanded mostly through acquisitions thus far, purchasing RCC Western Stores in 2012 and re-branding 29 stores in the Midwest and the South.

In 2013, the company took on another 30 retail outlets when it acquired Baskins Western & Work Wear. Baskins operated stores primarily in Texas and Louisiana.

But, in addition to its acquisitions, the company will open 17 new stores before the end of its fiscal year at the end of March 2015 – bringing its total to 158 retail outlets in 24 states.

Now, you might expect a company growing this quickly to be stretched thin financially. But you’d be wrong.

Financials in Great Shape

The company’s three-year sales growth rate is a robust 47%.

This helps explain the company’s Q2 FY 2015 release in which the firm saw its revenue rise to $86.38 million, an 11.6% increase over Q2 FY 2014.

Same-store sales, which include the company’s e-commerce numbers, increased 7.3% in the quarter. Net sales were also helped by contributions from 11 new stores that were opened between the third quarter of fiscal 2014 and the second quarter of fiscal 2015.

Gross profit for the company clocked in at $27.8 million or 32.1% of net sales, compared to adjusted gross profit of $24.3 million in the prior year period. This represents a 60 basis-point improvement in the company’s gross margin over the previous quarter’s 31.5% margin.

Income from operations came in at $4.38 million, which included a $0.9-million charge related to an acquisition that the company chose not to pursue. That compares to the company’s Q2 FY 2014 loss from operations of $0.13 million.

Net income for Q2 was $0.94 million, or $0.04 per diluted share, compared to a net loss of $1.39 million, or -$0.07 per share in the prior year period.

Boot Barn currently trades at approximately 60x trailing earnings, a significant premium to the industry average P/E of 18. This means investors should approach this stock with caution – despite the “Overweight” or “Buy” ratings of Piper Jaffray (PJC) and Wells Fargo (WFC).

Even assuming full-year earnings of $0.64, the stock trades at more than 32x full-year estimates – making the stock very expensive at current levels.

Boot Barn can make investors some real wealth, but not at its current levels. Wait for the P/E ratio to come back to Earth. Until then, this stock should stay stuck in the saddle.

Good investing,

Richard Robinson