Top Performer for Thurs: Big 5 Sporting Goods (BGFV)

Big 5 Sporting Goods Corporation (BGFV - Analyst Report) announced a big third-quarter report earlier this week that has led to increased earnings estimates in the past several days.

The sporting goods retailer also set down a fourth-quarter earnings guidance above the Zacks Consensus Estimate, which has also taken a turn higher lately.

Today, shares of Big 5 are up approximately 10%, making it a top-performing Zacks #1 Rank stock. Volume at around 165,000 shares is above the daily average at 153,000.

As of its quarterly report on Nov 3, Big 5 operated 382 stores in 11 states, providing a product mix that includes athletic shoes, apparel and accessories, outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, tennis, golf, snowboarding and in-line skating.

Out of 230 stocks on today's Zacks #1 Rank List, Big 5 is one of only 2 companies from the retail-miscellaneous/diversified list. The other name is Steiner Leisure Ltd. (STNR - Snapshot Report).

Earnings Estimates on the Rise

In the past 7 days, three of the 13 covering analysts for Big 5 have revised their estimates higher for this year. As a result, the Zacks Consensus Estimate has advanced 3.3% in the past week to 94 cents. Going a little further back, that guidance is up 6.8% from 2 months ago.

The Zacks Consensus Estimate for next year is at $1.10 per share, which corresponds to year-over-year growth of about 17%. This outlook has increased 1.9% in 7 days and 5.8% in 2 months. The past week has seen 2 of 11 covering analysts offering a boost.

Third-Quarter Report

Big 5 earned 37 cents per share in its third quarter, compared to 21 cents a year earlier. The Zacks Consensus Estimate called for a profit of 33 cents, marking a surprise of more than 12%.

The company has been on a pretty good roll of beating quarterly earnings expectations. It has put together an average surprise of nearly 50% over the past 4 quarters.

Net sales increased 4% to $231.6 million for Big 5, compared to $223.2 million in the year-ago quarter. Same-store sales were up 1.6%.

Contributing factors to the strong report include:

• Lowering inventory levels on a per-store basis by about 8% at the end of the quarter

• Generating operating cash flow of $47.4 million in the first 9 months of the year

• Further reducing debt levels to $60 million of long-term debt at the end of the quarter, compared to $100 million last year.

What About the Fourth Quarter?

"We are encouraged that the positive sales trends we experienced during the third quarter have continued, and actually improved, thus far in the fourth quarter," said Big 5 Chairman/President/CEO Steven G. Miller.

Big 5 expects fourth-quarter earnings per share between 28 cents and 38 cents, which was above the Zacks Consensus Estimate at the time of the report of 25 cents. Much like the annual estimates, that outlook has improved in the past 7 days and now rests at 31 cents, a 24% rise.

Big 5 also expects same-store sales in the positive low to low-mid-single digit range.