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Big 5 Sporting (BGFV) Tops Q4 Earnings, Stock Gains 16%
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Shares of Big 5 Sporting Goods Corp. (BGFV - Free Report) jumped 16% in after-hours trading session, as the company posted solid fourth-quarter 2016 earnings, which soared year over year and marked its third straight beat.
During the quarter, results benefited from significant competitive rationalization in the markets where the company operates due to the recent liquidation of rivals Sports Authority and Sport Chalet. Notably, Big 5 Sporting witnessed strong comparable store sales (comps) and merchandise margins in the quarter, despite a tough holiday environment.
Q4 Numbers
Adjusted earnings of 33 cents per share surged 50% year over year, and beat the Zacks Consensus Estimate by a penny. Including one-time items, the company’s earnings per share of 35 cents, soared 75% from 20 cents earned in the prior-year quarter.
Net sales dropped 3.2% to $266.3 million, though it came in line with the Zacks Consensus Estimate. As revealed earlier, soft top-line results for the quarter is mainly attributable to the inclusion of an extra week in the sales numbers for the respective periods in fiscal 2015. However, for comparison purpose, the comps numbers for the respective fiscal 2015 periods used the comparable 13-week and 52-week periods.
Comps for the fourth quarter were up 3.1%. Comps gained mainly from the rise in both customer transactions and average sales owing to the company’s actions to capitalize on the opportunities presented by the rationalization in the retail sporting goods industry.
Looking at product categories, all major categories gained from the aforementioned competitive store closures, partly offset by weak winter product sales. During the quarter, apparel category witnessed low single-digit growth and hard goods business was up in mid single-digits. However, the footwear category was slightly down in the quarter.
Costs & Margins
Gross profit came in at $87.3 million, up 1.7% from the comparable year-ago level. Moreover, gross profit margin expanded 160 basis points (bps) to 32.8% in fourth-quarter 2016 due to a 68 bps improvement in merchandise margins and lower store occupancy costs, as a percentage of sales.
Selling, general and administrative (SG&A) expenses, as a percentage of sales, declined 30 bps to 28.2%. On a dollar basis, SG&A expenses declined about 4% to $75.2 million, owing to reduced advertising costs and presence of an additional week in the fourth quarter of 2015.
Consequently, the company’s operating profit of $12.1 million soared 64.2% year over year. Further, operating margin expanded 190 bps to 4.6%.
Big 5 Sporting Goods Corporation Price, Consensus and EPS Surprise
Big 5 Sporting had cash of $7.9 million, long-term debt of $10 million, and total shareholders’ equity of $205 million as of Jan 1, 2017.
During 2016, the company’s operating cash flows totaled $73.7 million. Strong cash flows during the quarter helped the company to considerably lower borrowings under its credit facility. Capital expenditure in 2016 was $14.1 million, excluding non-cash acquisitions.
For 2017, the company currently anticipates capital expenditures, excluding non-cash acquisitions, in the range of $18–$22 million.
Dividend & Share Repurchase
Big 5 Sporting remains committed to returning cash to share holders by paying dividends and share repurchases. The company returned nearly $13 million to shareholders in the form of dividends and share repurchases, in 2016. Also, concurrent to its earnings release, management announced a quarterly cash dividend of 15 cents per share, payable on Mar 20 to shareholders on record as of Mar 6.
Store Update
During the quarter, Big 5 Sporting opened and shuttered one store each, thus ending 2016 with 432 stores. Further, in first-quarter 2017, the company relocated one store and plans to shutter down one store. In fiscal 2017, Big 5 Sporting expects to open roughly eight new stores, while closing down three.
Outlook
Management remains impressed with the solid end to 2016, and is on track to deliver another good year. Incidentally, the company revealed that the first quarter has started on a strong note, evident from a quarter-to-date comps growth in the mid single-digit range. The company continues to gain from the closure of several rival stores in its markets, which bode well for sales and margins.
Also, comps are benefiting from robust demand for winter products stemming from favorable winter weather conditions, across most Western regions. However, this has been partly negated by weakness across non-winter products, owing to heavy rains in the last few weeks. Management stated that the non-winter categories gain more significance in the remaining quarter, thus making it hopeful of warm weather conditions. That said, the company’s solid merchandise offerings for the spring selling season keeps it well placed to enrich customer experience.
For first-quarter 2017, the company anticipates comps to increase in the mid single-digit range. Further, it envisions earnings in the range of 12–18 cents per share. The current Zacks Consensus Estimate is pegged at just 5 cents, signaling chances of upward revisions.
Zacks Rank
Big 5 Sporting currently carries a Zacks Rank #4 (Sell). Shares of the company have underperformed the Zacks categorized Retail – Miscellaneous/Diversified industry in the last three months. Evidently, Big 5 Sporting has lost 25.4% over the past three months, compared with the industry’s drop of just 4.3%.
Children's Place has an average positive earnings surprise of 36.3% in the trailing four quarters. The stock, with a long-term growth rate of 10.3%, has seen positive estimate revisions in the last 60 days.
Kate Spade, with long-term earnings per share (EPS) growth rate of 28.3%, has seen positive estimate revisions over the past 30 days.
Zumiez’s long-term EPS growth rate of 15% and solid positive estimate revisions over the past 30 days help it stand strong in the industry. Moreover, the company flaunts a superb earnings surprise history.
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Big 5 Sporting (BGFV) Tops Q4 Earnings, Stock Gains 16%
Shares of Big 5 Sporting Goods Corp. (BGFV - Free Report) jumped 16% in after-hours trading session, as the company posted solid fourth-quarter 2016 earnings, which soared year over year and marked its third straight beat.
During the quarter, results benefited from significant competitive rationalization in the markets where the company operates due to the recent liquidation of rivals Sports Authority and Sport Chalet. Notably, Big 5 Sporting witnessed strong comparable store sales (comps) and merchandise margins in the quarter, despite a tough holiday environment.
Q4 Numbers
Adjusted earnings of 33 cents per share surged 50% year over year, and beat the Zacks Consensus Estimate by a penny. Including one-time items, the company’s earnings per share of 35 cents, soared 75% from 20 cents earned in the prior-year quarter.
Net sales dropped 3.2% to $266.3 million, though it came in line with the Zacks Consensus Estimate. As revealed earlier, soft top-line results for the quarter is mainly attributable to the inclusion of an extra week in the sales numbers for the respective periods in fiscal 2015. However, for comparison purpose, the comps numbers for the respective fiscal 2015 periods used the comparable 13-week and 52-week periods.
Comps for the fourth quarter were up 3.1%. Comps gained mainly from the rise in both customer transactions and average sales owing to the company’s actions to capitalize on the opportunities presented by the rationalization in the retail sporting goods industry.
Looking at product categories, all major categories gained from the aforementioned competitive store closures, partly offset by weak winter product sales. During the quarter, apparel category witnessed low single-digit growth and hard goods business was up in mid single-digits. However, the footwear category was slightly down in the quarter.
Costs & Margins
Gross profit came in at $87.3 million, up 1.7% from the comparable year-ago level. Moreover, gross profit margin expanded 160 basis points (bps) to 32.8% in fourth-quarter 2016 due to a 68 bps improvement in merchandise margins and lower store occupancy costs, as a percentage of sales.
Selling, general and administrative (SG&A) expenses, as a percentage of sales, declined 30 bps to 28.2%. On a dollar basis, SG&A expenses declined about 4% to $75.2 million, owing to reduced advertising costs and presence of an additional week in the fourth quarter of 2015.
Consequently, the company’s operating profit of $12.1 million soared 64.2% year over year. Further, operating margin expanded 190 bps to 4.6%.
Big 5 Sporting Goods Corporation Price, Consensus and EPS Surprise
Big 5 Sporting Goods Corporation Price, Consensus and EPS Surprise | Big 5 Sporting Goods Corporation Quote
Financial Position
Big 5 Sporting had cash of $7.9 million, long-term debt of $10 million, and total shareholders’ equity of $205 million as of Jan 1, 2017.
During 2016, the company’s operating cash flows totaled $73.7 million. Strong cash flows during the quarter helped the company to considerably lower borrowings under its credit facility. Capital expenditure in 2016 was $14.1 million, excluding non-cash acquisitions.
For 2017, the company currently anticipates capital expenditures, excluding non-cash acquisitions, in the range of $18–$22 million.
Dividend & Share Repurchase
Big 5 Sporting remains committed to returning cash to share holders by paying dividends and share repurchases. The company returned nearly $13 million to shareholders in the form of dividends and share repurchases, in 2016. Also, concurrent to its earnings release, management announced a quarterly cash dividend of 15 cents per share, payable on Mar 20 to shareholders on record as of Mar 6.
Store Update
During the quarter, Big 5 Sporting opened and shuttered one store each, thus ending 2016 with 432 stores. Further, in first-quarter 2017, the company relocated one store and plans to shutter down one store. In fiscal 2017, Big 5 Sporting expects to open roughly eight new stores, while closing down three.
Outlook
Management remains impressed with the solid end to 2016, and is on track to deliver another good year. Incidentally, the company revealed that the first quarter has started on a strong note, evident from a quarter-to-date comps growth in the mid single-digit range. The company continues to gain from the closure of several rival stores in its markets, which bode well for sales and margins.
Also, comps are benefiting from robust demand for winter products stemming from favorable winter weather conditions, across most Western regions. However, this has been partly negated by weakness across non-winter products, owing to heavy rains in the last few weeks. Management stated that the non-winter categories gain more significance in the remaining quarter, thus making it hopeful of warm weather conditions. That said, the company’s solid merchandise offerings for the spring selling season keeps it well placed to enrich customer experience.
For first-quarter 2017, the company anticipates comps to increase in the mid single-digit range. Further, it envisions earnings in the range of 12–18 cents per share. The current Zacks Consensus Estimate is pegged at just 5 cents, signaling chances of upward revisions.
Zacks Rank
Big 5 Sporting currently carries a Zacks Rank #4 (Sell). Shares of the company have underperformed the Zacks categorized Retail – Miscellaneous/Diversified industry in the last three months. Evidently, Big 5 Sporting has lost 25.4% over the past three months, compared with the industry’s drop of just 4.3%.
Nonetheless, better-ranked stocks in the retail sector include The Children's Place, Inc. (PLCE - Free Report) , Kate Spade & Company and Zumiez Inc. (ZUMZ - Free Report) , each with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Children's Place has an average positive earnings surprise of 36.3% in the trailing four quarters. The stock, with a long-term growth rate of 10.3%, has seen positive estimate revisions in the last 60 days.
Kate Spade, with long-term earnings per share (EPS) growth rate of 28.3%, has seen positive estimate revisions over the past 30 days.
Zumiez’s long-term EPS growth rate of 15% and solid positive estimate revisions over the past 30 days help it stand strong in the industry. Moreover, the company flaunts a superb earnings surprise history.
Everything You Need to Know About Snapchat BEFORE It Goes Public
You may be curious about the buzz surrounding Snap Inc.'s IPO on March 2. With the company expected to be valued around $22 billion, it is expected to be the largest IPO since 2014. But should you snap up this tech stock on Day 1?
In the 2017 IPO Watch List, you'll get an inside look at Snap's exciting prospects and potential challenges. You'll also learn about 4 other exciting tech companies with jaw-dropping growth. Each could go public in the coming months.
Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the latest scoop. Download this IPO Watch List today for free >>