Back to top

Image: Bigstock

Big Lots (BIG) Looks Promising: Invest in the Stock Now

Read MoreHide Full Article

Despite a competitive retail landscape, Big Lots, Inc. (BIG - Free Report) has emerged as a strong contender to be an investment choice on the back of its strategic endeavors that have helped it continue with its positive earnings surprise streak. The is quite evident from the stock’s year-to-date performance, which shows that it has surged 41.4% compared with the Zacks categorized Retail-Discount & Variety industry’s 7.6% gain. We believe there is still much momentum left in this Zacks Rank #2 (Buy) stock, which is reflected from its VGM Score of “B” and long-term earnings growth rate of 13.5%.

Let’s Delve Deeper

Big Lots’ furniture financing programs as well as the food and consumables categories have been consistently gaining traction. Notably, response has been impressive for furniture financing. Furniture has been the leading performer in the past few quarters, increasing in mid-single digits in third-quarter fiscal 2016, driven by higher demand for mattresses, upholstery and case goods. Moreover, the company’s management has been expanding assortments in this category by including lawn and garden items, such as patio furniture, gazebos and gas grills.

Further, the company rolled out its cooler/freezer facility in stores, in an attempt to expand its merchandise of food-related items to target food stamp recipients. These initiatives are likely to boost comps and revenues, going forward. Moreover, Big Lots’ has been revamping its store organization.

These initiatives have helped the company to continue with its positive earnings surprise streak in the last four quarters. We observed that in the trailing four quarters the company outperformed the Zacks Consensus Estimate by an average of 83%. Recently, the company posted third-quarter fiscal 2016 adjusted earnings per share of 4 cents in comparison to break-even reported in the prior-year quarter. Additionally, the company’s bottom-line surpassed the Zacks Consensus Estimate of a loss of 2 cents.

Following the sturdy performance, the company raised its fiscal 2016 earnings view. For the fiscal, adjusted earnings per share are projected in the band of $3.55 to $3.60 against the previous guidance of $3.45 to $3.55.

BIG LOTS INC Price, Consensus and EPS Surprise

Bottom Line

From the above analysis it is apparent that Big Lots is a stock that deserves a place in your portfolio. Investors may consider other favorably stocks such as Burlington Stores, Inc. (BURL - Free Report) flaunting a Zacks Rank #1 (Strong Buy), and Target Corporation (TGT - Free Report) and Ross Stores, Inc. (ROST - Free Report) both carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.

Target delivered an average positive earnings surprise of 9.9% in the trailing four quarters and has a long-term earnings growth rate of 8%.

Ross Stores delivered an average positive earnings surprise of 5% in the trailing four quarters and has a long-term earnings growth rate of 11.4%.

The Best Place to Start Your Stock Search

Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>

Published in