Birkenstock's (BIRK 2.26%) roots date all the way back to 1774. While the German company has been making footwear for about 250 years, it hasn't been a public company for all that long. It completed its initial public offering (IPO) in October 2023, making it one of the younger publicly traded stocks.
Despite its age, Birkenstock believes its best days are ahead. The company thinks every human on the planet could benefit from its footwear, which is designed to encourage proper foot health.
As more people learn about its footwear -- primarily by word-of-mouth from other satisfied customers -- it should continue to grow sales and profitability. The company also has a long history of innovation to create new products that drive growth.
You might already be one of the many people wearing Birkenstock footwear, which could have you wondering how to invest in its stock. Here's a step-by-step guide on investing in the shoe stock and some factors to consider before adding it to your portfolio.
Stock
How to buy
How to buy Birkenstock stock
It's easy to buy shares of Birkenstock. Here's a step-by-step guide for adding the footwear company to your portfolio.
1. Open a brokerage account
You'll need to open and fund a brokerage account before buying shares of any company. If you don't have one yet, here are some of the best-rated brokers and trading platforms. Take your time to research the brokers to find the best one for you.
2. Figure out your budget
Before making your first trade, you'll need to determine a budget for how much money you want to invest. A general rule of thumb is that you shouldn't invest money you'll need in the next three to five years, like your emergency fund or money you're saving for something specific (e.g., a new house or car). You'll then want to figure out how to allocate that money.
The Motley Fool's investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years. You don't have to get there all at once. For example, if you have $1,000 available to start investing, you might want to begin by allocating that money equally across at least 10 stocks and then grow from there.
3. Do your research
It's essential to thoroughly research a company before buying its shares. You should learn about how it makes money, its competitors, its balance sheet, and other factors to make sure you have a solid grasp on whether the company can grow value for its shareholders over the long term. Continue reading to learn more about some crucial factors to consider before investing in Birkenstock stock.
4. Place an order
Once you've opened and funded a brokerage account, set your investing budget, and researched the stock, it's time to buy shares. The process is relatively straightforward. Go to your brokerage account's order page and fill out all the relevant information, including:
- The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
- The stock ticker (BIRK for Birkenstock).
- Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at market price.
Here's a screenshot of an order page from the five-star rated Fidelity Investment's trading platform:
Once you complete the order page, click to submit your trade and become a Birkenstock shareholder.
Should I invest?
Should I invest in Birkenstock?
It's imperative to research a company before buying its stock. The research process can help increase your belief that a stock can deliver worthwhile returns over the long term. However, it could also cause you to see something about the company that changes your mind about buying shares. Here are some reasons you might want to invest in Birkenstock:
- You're a huge fan of Birkenstock's products.
- You think the company can achieve its financial goals of delivering revenue growth in the mid- to high-teens, with strong profitability over the long term.
- Buying Birkenstock shares would help diversify your portfolio, including your international exposure.
- You believe the company can achieve its goal of getting its leverage ratio below 1.0 times.
- You think the company can outperform the S&P 500 over the next three to five years.
- You don't need dividend income right now.
- You're not overly concerned about a potential recession's impact on Birkenstock's growth rate or profit margins.
On the other hand, here are some reasons you might decide against investing in the footwear company:
- You don't like the company's products or haven't tried them.
- You already own several other shoe and apparel stocks.
- You're concerned about Birkenstock's debt level and worry that it might struggle to achieve its deleveraging plan.
- You're worried that an economic downturn could slow Birkenstock's sales and pressure its margins.
- You're not convinced Birkenstock can outperform the S&P 500 over the next few years.
- You don't want to own shares of companies with headquarters outside the U.S.
- You're retired or nearing retirement and need investments that produce income.
Profitability
Is Birkenstock profitable?
Digging into a company's profitability is an important part of an investor's research process. Ideally, you'd want to see a company producing strong profits that rise over time. Profit growth is typically a major driver of a stock's performance over the long haul.
Birkenstock is a profitable company. The shoemaker reported 75 million euros ($83 million) of net profit during the fiscal 2024 third quarter on 565 million euros ($624 million) in revenue. Revenue was up 19% compared to the previous year, while net profit increased by 18%.
The company expects to continue growing its revenue and earnings over the long term. It aims for revenue growth in the mid- to high teens while keeping its adjusted gross profit margin above 60% and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin above 30%.
Birkenstock should also see lower financing costs in the future. It used its IPO proceeds to repay debt and plans to continue reducing debt with retained cash flow, which should drive down its interest expense. This outlook implies that the company's profitability should continue growing in the future.
Dividends
Does Birkenstock pay a dividend?
Birkenstock hasn't made dividend payments as of mid-2024. The company recently completed its IPO, noting in its IPO prospectus that it didn't "anticipate paying any cash dividends in the foreseeable future." It plans to retain all its available funds and future earnings to finance the development and expansion of its business.
ETF options
ETFs with exposure to Birkenstock
Many investors prefer to make truly passive investments rather than directly owning stocks they must actively monitor. Buying an exchange-traded fund (ETF) can be a great way to gain passive exposure in a company they're interested in without actively owning the stock.
Exchange-Traded Fund (ETF)
As a recent IPO, Birkenstock was just starting to make its way into many ETFs as of mid-2024, so it had a rather low allocation across most funds. According to ETFChannel.com, First Trust IPOX Europe Equity Opportunities ETF (FPXE 1.11%) and First Trust International Equity Opportunities ETF (FPXI 0.85%) had the highest allocations, at 1.5% and 0.9%, respectively.
Alternatively, investors could use thematic ETFs to gain exposure to trends similar to investing in Birkenstock. For example, investors interested in recent IPOs could consider the Renaissance IPO ETF (IPO 1.56%). This ETF typically purchases shares of a company within 90 days of its IPO and holds them for about three years. The fund held over 40 IPO stocks in mid-2024 and had an ETF expense ratio of 0.6%.
Related investing topics
Stock splits
Will Birkenstock stock split?
Birkenstock didn't have an upcoming stock split on the calendar as of mid-2024. The company had only completed its IPO in October 2023, pricing its IPO at $46 per share. Shares were right around the IPO price as of mid-2024, so it seems unlikely that Birkenstock will need to split its stock anytime soon.
The bottom line on Birkenstock
Birkenstock is an iconic brand with a bright future. The footwear company plans to grow its revenue at a double-digit clip over the long term while delivering healthy profitability. It also intends to continue reducing its debt. These factors should help create value for its shareholders over the long haul.
FAQ
Investing in Birkenstock FAQ
Can you buy Birkenstock stock?
You can buy Birkenstock stock through your brokerage account. The company completed its IPO in October 2023, so anyone with a brokerage account can now buy shares of the sandal maker.
How do I get into Birkenstock IPO?
Birkenstock completed its IPO in October 2023, pricing its shares at $46 apiece. While it's too late to get into Birkenstock's IPO since it's already public, investors can still buy shares of the German sandal maker through their regular brokerage account. The company trades on the New York Stock Exchange under the stock ticker BIRK.
Is Birkenstock a publicly traded company?
Birkenstock is a publicly traded company. It trades on the New York Stock Exchange under the stock ticker BIRK.
Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
