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On Jul 13, Zacks Investment Research upgraded Big 5 Sporting Goods Corp. (BGFV - Analyst Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Big 5 Sporting continues with its positive earnings surprise streak. This leading sporting goods retailer delivered positive earnings surprises in the last 4 quarters with an average beat of 34.8%. In the last reported quarter, the company outperformed the Zacks Consensus Estimate by 61.9%.

The recent performance was driven by solid top-line growth and cost containment endeavors, thereby prompting management to post an upbeat guidance.  The company reported robust first-quarter 2013 results on Apr 30, wherein earnings of 34 cents a share surpassed the Zacks Consensus Estimate of 21 cents and showed a substantial improvement over a penny reported in the year-ago quarter.

The company expects favorable weather conditions and higher demand for firearms and ammunition products to drive same-store sales in the mid single-digit range during the second quarter of 2013. Further, the company anticipates earnings for the quarter to range from 20–26 cents per share.

Big 5 Sporting has been witnessing rising earnings estimates on the back of strong quarterly results and an improved guidance for 2013. Over the past 60 days, the Zacks Consensus Estimate for 2013 and 2014 increased 1.5% and 1.3% respectively, as some of the estimates moved upwards. Further, the Zacks Consensus Estimate for 2013 and 2014 jumped 22.4% and 22.8% respectively, over the past 90 days.

We believe that Big 5 Sporting’s growth initiatives, which include expanding its store base and incorporating technological advancements, will help to serve patrons better and drive sales as well.  The company’s long-term expected earnings growth rate currently stands at 13.3%.

Other Stocks to Consider

Apart from Big 5, there are other stocks with a favorable Zacks rank, which are capable of continuing their upbeat performances. These include Wet Seal Inc. (WTSL - Analyst Report), The Children (PLCE - Snapshot Report) and Conns Inc. (CONN - Snapshot Report), all of which carry a Zacks Rank #1 (Strong Buy).

 

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