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Big Lots (BIG) Down 5.9% Since Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Big Lots, Inc. (BIG - Free Report) . Shares have lost about 5.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Big Lots Tops Q4 Earnings, Issues Guidance
In fourth-quarter fiscal 2016, Big Lots reported adjusted earnings from continuing operations of $2.26 per share beating the Zacks Consensus Estimate of $2.23 and also increased 12.4% year over year. Further, earnings surpassed its guided range of $2.18–2.23 per share. Segments like Furniture, mattresses and upholstery were the top performers during the quarter.
Including one-time items earnings from continuing operations came in at $1.99, up 4.2% year over year.
While revenues of $1,579.2 million missed the Zacks Consensus Estimate of $1,590 million and also declined 0.3% from the year-ago figure, primarily due to lower store count in comparison with the prior-year quarter. Notably, the company’s revenues missed the Zacks Consensus Estimate for the third straight quarter.
Big Lots reported comparable sales growth of 0.3%, making it the twelfth consecutive quarter of flat or positive comps.
The company’s gross profit grew 0.9% year over year to $653.3 million. Gross margin came in at 41.4% in comparison with the year-ago figure of 40.9%. Operating profits totaled $144.5 million, up 6.6% from the prior-year quarter.
Other Financial Details
Big Lots ended the quarter with cash and cash equivalents of $51.2 million, down 5.5% year over year. Inventories were up 1% to $858.7 million. Total shareholder equity at the end of the quarter decreased 9.7% year over year to $650.3 million.
In the quarter under review, the company closed 13 stores and opened three. As of Jan 28, 2017, Big Lots operated 1,432 stores.
Long-term obligations under the bank credit facility totaled $106.4 million at the end of the quarter under review.
On Feb 28, the board of directors raised the quarterly cash dividend by about 19% to $0.25. The dividend will be paid on Mar 31, to shareholders on record as of Mar 17. Moreover, the company also announced $150 million of share repurchase program.
Guidance
The company provided guidance for first-quarter 2017 as well as fiscal 2017. For the fiscal 2017, adjusted earnings per share are projected in the band of $3.95–$4.10. This represents growth of 9–13% over $3.64 per share recorded in fiscal 2016. Comps are expected to increase in the range of 1–2%, while total sales are likely to be flat to up slightly. Moreover, the company expects cash flow generation of nearly $180–$190 million.
For the first quarter, earnings per share are forecasted in the range of $0.95 to $1.05 compared with $0.82 earned in the prior-year quarter. Comps are expected to be flat to up 2%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter In the past month, the consensus estimate has shifted by 9.8% due to these changes.
At this time, Big Lots' stock has a strong Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value and growth investors than momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Big Lots (BIG) Down 5.9% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Big Lots, Inc. (BIG - Free Report) . Shares have lost about 5.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Big Lots Tops Q4 Earnings, Issues Guidance
In fourth-quarter fiscal 2016, Big Lots reported adjusted earnings from continuing operations of $2.26 per share beating the Zacks Consensus Estimate of $2.23 and also increased 12.4% year over year. Further, earnings surpassed its guided range of $2.18–2.23 per share. Segments like Furniture, mattresses and upholstery were the top performers during the quarter.
Including one-time items earnings from continuing operations came in at $1.99, up 4.2% year over year.
While revenues of $1,579.2 million missed the Zacks Consensus Estimate of $1,590 million and also declined 0.3% from the year-ago figure, primarily due to lower store count in comparison with the prior-year quarter. Notably, the company’s revenues missed the Zacks Consensus Estimate for the third straight quarter.
Big Lots reported comparable sales growth of 0.3%, making it the twelfth consecutive quarter of flat or positive comps.
The company’s gross profit grew 0.9% year over year to $653.3 million. Gross margin came in at 41.4% in comparison with the year-ago figure of 40.9%. Operating profits totaled $144.5 million, up 6.6% from the prior-year quarter.
Other Financial Details
Big Lots ended the quarter with cash and cash equivalents of $51.2 million, down 5.5% year over year. Inventories were up 1% to $858.7 million. Total shareholder equity at the end of the quarter decreased 9.7% year over year to $650.3 million.
In the quarter under review, the company closed 13 stores and opened three. As of Jan 28, 2017, Big Lots operated 1,432 stores.
Long-term obligations under the bank credit facility totaled $106.4 million at the end of the quarter under review.
On Feb 28, the board of directors raised the quarterly cash dividend by about 19% to $0.25. The dividend will be paid on Mar 31, to shareholders on record as of Mar 17. Moreover, the company also announced $150 million of share repurchase program.
Guidance
The company provided guidance for first-quarter 2017 as well as fiscal 2017. For the fiscal 2017, adjusted earnings per share are projected in the band of $3.95–$4.10. This represents growth of 9–13% over $3.64 per share recorded in fiscal 2016. Comps are expected to increase in the range of 1–2%, while total sales are likely to be flat to up slightly. Moreover, the company expects cash flow generation of nearly $180–$190 million.
For the first quarter, earnings per share are forecasted in the range of $0.95 to $1.05 compared with $0.82 earned in the prior-year quarter. Comps are expected to be flat to up 2%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter In the past month, the consensus estimate has shifted by 9.8% due to these changes.
Big Lots, Inc. Price and Consensus
Big Lots, Inc. Price and Consensus | Big Lots, Inc. Quote
VGM Scores
At this time, Big Lots' stock has a strong Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value and growth investors than momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.