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We have maintained our long-term Outperform recommendation on Big 5 Sporting Goods Corp. (BGFV - Analyst Report) based on the company’s better-than-expected quarterly results for the third consecutive quarter.

Why Reiterate?

Big 5 Sporting has surpassed the Zacks Consensus Estimate in 3 of the trailing 4 quarters in the range of negative 66.7% to positive 50.0%. The average surprise over the last 4 quarters remained positive at 2.7%.

Driven by strong top-line performance along with effective cost management, Big 5 Sporting’s earnings for fourth-quarter 2012 jumped nearly four-fold to 19 cents per share against 5 cents reported in the comparable year-ago quarter, and came a penny ahead of  the Zacks Consensus Estimate. The company’s sales grew 7.4% year over year to $243.6 million and surpassed the Zacks Consensus Estimate of $242.0 million.

Big 5 Sporting now anticipates earnings per share in the range of 18 cents to 24 cents per share in first-quarter 2013 compared with a penny recorded in the first quarter of 2012. Further, in anticipation of favorable weather conditions and higher demand for firearms and ammunition products, management expects same-store sales in first-quarter 2013 to grow in the high-single-digit range.

Following strong quarterly performance for the fourth quarter and a robust outlook, the Zacks Consensus Estimates have been showing an upward trend. For fiscal 2012 and 2013, the Zacks Consensus Estimate was raised by 17 cents and 9 cents to $1.07 and $1.23 per share in the last 30 days, respectively.

Further, we believe Big 5 Sporting continues to progress well with its growth initiatives, which include expanding its store base and bringing in technological advancements to better serve its patrons. The company leverages an extensive network of stores to effectively penetrate into its target markets, which in turn, enables the company to generate healthy sales and gain market share. For full-year 2013, the company targets to open nearly 15 to 20 new outlets, of which 3 will be relocations. Further, the company plans to close 3 relocated stores.

Moreover, the company’s new business intelligence system and distribution channel will help significantly reduce the operating expenses.

Other Stocks Worth Considering

Big 5 Sporting currently has a Zacks Rank #1 (Strong Buy) rating. Other stocks worth considering in the retail space are Cabela’s Inc. (CAB - Analyst Report), which has a Zacks Rank #1 (Strong Buy), Hot Topic Inc. and Hastings Entertainment Inc. , both of which hold a Zacks Rank #2 (Buy).

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