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Why is Big 5 Sporting (BGFV) in Investor's Good Books?
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Sporting goods retailer, Big 5 Sporting Goods Inc. (BGFV - Free Report) has been gaining on the back of strong earnings trends, robust outlook, store penetration strategies, impressive growth plans and financial strength. These factors have aided it to retain the Zacks Rank #1 (Strong Buy) spot, carrying a VGM Style Score of “A”.
Further, Big 5 Sporting's shares have substantially outpaced the broader industry in the past one year. While the stock gained a solid 48.8%, the Zacks categorized Retail – Miscellaneous industry dipped 5.8%.
What’s Aiding the Stock Performance?
Much of the growth in stock price can be attributed to the company’s solid earnings trend as evident from its fourth straight earnings beat in first-quarter 2017.
Big 5 Sporting had a solid start to 2017 as both sales and earnings topped estimates and improved year over year in the first quarter. Results gained from significant competitive rationalization in the markets where the company operates due to the recent liquidation of rivals Sports Authority and Sport Chalet. Further, this aided comparable store sales (comps) and merchandise margins in the quarter.
Moreover, management remains impressed with the favorable results so far in the second quarter and believes it is well positioned for the summer selling season backed by its efforts to capitalize on the rationalization in the sporting goods industry. For second-quarter 2017, the company anticipates comps to increase in the mid-single digit range. Additionally, it envisions earnings in the range of 14–20 cents per share compared with earnings of 10 cents in the prior-year quarter.
Apart from a solid earnings trend, Big 5 Sporting’s unique strategy of offering exclusive branded merchandise sourced from leading manufacturers provides it with a competitive edge over rivals in a cut-throat specialty retailing industry. The company leverages strong vendor relationships to source overstock and closeout merchandise at substantial discounts. This helps the company achieve the dual objective of boosting gross margin while offering compelling value to customers.
Additionally, the company’s market penetration strategy through store expansions bodes well. The company targets generating healthy sales and capturing market share through this strategy. Further, the company’s strong balance sheet offers it the financial flexibility to drive future growth. The company also remains committed toward enhancing shareholder returns, as evident from its regular practice of returning value to stockholders in the form of dividends and share buybacks.
Build-A-Bear Workshop has a long-term EPS growth rate of 22.5%. Further, the company has to its credit a spectacular earnings surprise history with an average beat of 67.5% recorded in the trailing four quarters.
Office Depot, with a long-term earnings growth rate of 11.4%, has advanced nearly 14.2% year to date.
Michaels Companies has a long-term earnings growth rate of 16%. Further, the company has witnessed positive estimate revisions for the current quarter in the last seven days.
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Why is Big 5 Sporting (BGFV) in Investor's Good Books?
Sporting goods retailer, Big 5 Sporting Goods Inc. (BGFV - Free Report) has been gaining on the back of strong earnings trends, robust outlook, store penetration strategies, impressive growth plans and financial strength. These factors have aided it to retain the Zacks Rank #1 (Strong Buy) spot, carrying a VGM Style Score of “A”.
Further, Big 5 Sporting's shares have substantially outpaced the broader industry in the past one year. While the stock gained a solid 48.8%, the Zacks categorized Retail – Miscellaneous industry dipped 5.8%.
What’s Aiding the Stock Performance?
Much of the growth in stock price can be attributed to the company’s solid earnings trend as evident from its fourth straight earnings beat in first-quarter 2017.
Big 5 Sporting had a solid start to 2017 as both sales and earnings topped estimates and improved year over year in the first quarter. Results gained from significant competitive rationalization in the markets where the company operates due to the recent liquidation of rivals Sports Authority and Sport Chalet. Further, this aided comparable store sales (comps) and merchandise margins in the quarter.
Moreover, management remains impressed with the favorable results so far in the second quarter and believes it is well positioned for the summer selling season backed by its efforts to capitalize on the rationalization in the sporting goods industry. For second-quarter 2017, the company anticipates comps to increase in the mid-single digit range. Additionally, it envisions earnings in the range of 14–20 cents per share compared with earnings of 10 cents in the prior-year quarter.
Apart from a solid earnings trend, Big 5 Sporting’s unique strategy of offering exclusive branded merchandise sourced from leading manufacturers provides it with a competitive edge over rivals in a cut-throat specialty retailing industry. The company leverages strong vendor relationships to source overstock and closeout merchandise at substantial discounts. This helps the company achieve the dual objective of boosting gross margin while offering compelling value to customers.
Additionally, the company’s market penetration strategy through store expansions bodes well. The company targets generating healthy sales and capturing market share through this strategy. Further, the company’s strong balance sheet offers it the financial flexibility to drive future growth. The company also remains committed toward enhancing shareholder returns, as evident from its regular practice of returning value to stockholders in the form of dividends and share buybacks.
Other Stocks to Consider
Some other top-ranked stocks in the same industry include Build-A-Bear Workshop Inc. (BBW - Free Report) , a Zacks Rank #1, Office Depot Inc. (ODP - Free Report) and The Michaels Companies Inc. , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Build-A-Bear Workshop has a long-term EPS growth rate of 22.5%. Further, the company has to its credit a spectacular earnings surprise history with an average beat of 67.5% recorded in the trailing four quarters.
Office Depot, with a long-term earnings growth rate of 11.4%, has advanced nearly 14.2% year to date.
Michaels Companies has a long-term earnings growth rate of 16%. Further, the company has witnessed positive estimate revisions for the current quarter in the last seven days.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>