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Big 5 Sporting (BGFV) Tops Q1 Earnings & Sales, Stock Up
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Shares of Big 5 Sporting Goods Corp. (BGFV - Free Report) jumped 12.3% in after-hours trading session, as the company posted solid first-quarter 2017 results, wherein both sales and earnings topped estimates and improved year over year. This also marked the company’s fourth straight earnings beat.
Overall, shares of the company have substantially outperformed the Zacks categorized Retail – Miscellaneous/Diversified industry in the past one year. While Big 5 Sporting has gained a solid 84.2%, the industry has witnessed a drop of 4.6%.
Coming back to 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.
Q1 Numbers
Adjusted earnings of 24 cents per share compared with an adjusted loss per share of 2 cents in the prior-year quarter. Additionally, the bottom line substantially surpassed the Zacks Consensus Estimate of 14 cents.
Net sales rose 7.7% to $252.6 million and beat the Zacks Consensus Estimate of $244.3 million. Sales gained primarily from a 7.9% increase in comparable store sales (comps) that benefited from the closure of several rival stores and favorable weather. Further, top-line growth was aided by a calendar shift of the Easter holiday, when the company’s stores are closed, in to the second quarter this year compared with the first quarter in the prior-year.
Comps also benefited from improvements in both customer transactions and average sale. Looking at product categories, the company delivered comps growth in all major categories including apparel, footwear and hardgoods.
Costs & Margins
Gross profit came in at $83.6 million, up 17.7% from the comparable year-ago level. Moreover, gross profit margin expanded 280 basis points (bps) to 33.1% in first-quarter 2017. Gross margin growth was driven by a 228 bps improvement in merchandise margins and lower store occupancy, and distribution costs, as a percentage of sales.
Selling, general and administrative (SG&A) expenses, as a percentage of sales, declined 90 bps to 29.5%. On a dollar basis, SG&A expenses increased about 4.8% to $74.6 million, owing to higher employee labor and benefit expense.
Consequently, the company’s operating profit of $9 million compared favorably with an operating loss of $254 in the prior-year quarter.
Financial Position
Big 5 Sporting had cash of $5.9 million, long-term debt of $21.8 million, and total shareholders’ equity of $206.8 million as of Apr 2, 2017.
Dividend & Share Repurchase
Big 5 Sporting remains committed to returning cash to share holders by paying dividends and share repurchases. Concurrent to the earnings release, management announced a quarterly cash dividend of 15 cents per share, payable on Jun 15 to shareholders on record as of Jun 1.
Store Update
During the quarter, Big 5 Sporting opened one relocated store and shuttered two stores, one of which was relocation. The company ended first-quarter 2017 with 431 stores. Further, in second-quarter 2017, the company opened one store and plans to open one more store through the rest of the quarter. In fiscal 2017, Big 5 Sporting expects to open roughly eight new stores, while closing down three.
Outlook
Management remains impressed with the solid start to the second quarter and believes it is well positioned for the summer selling season driven by 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. Further, it envisions earnings in the range of 14–20 cents per share compared with earnings of 10 cents in the prior-year quarter. The company expects results for the second quarter to include a negative impact from the calendar shift of Easter and Fourth of July holidays into the second quarter.
Big 5 Sporting Goods Corporation Price, Consensus and EPS Surprise
Big 5 Sporting currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the retail sector include The Children’s Place Inc. (PLCE - Free Report) , Build-A-Bear Workshop Inc. (BBW - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), and The Michaels Companies Inc. , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Children's Place has an average positive earnings surprise of 39% in the trailing four quarters. The stock, with a long-term EPS growth rate of 8%, has seen positive estimate revisions in the last 60 days.
Build-A-Bear, with long-term EPS growth rate of 22.5%, has an average positive earnings surprise of 67.5% in the trailing four quarters.
Michaels Companies’ long-term EPS growth rate of 16% and solid positive estimate revisions in the past 60 days help it stand strong in the industry.
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Big 5 Sporting (BGFV) Tops Q1 Earnings & Sales, Stock Up
Shares of Big 5 Sporting Goods Corp. (BGFV - Free Report) jumped 12.3% in after-hours trading session, as the company posted solid first-quarter 2017 results, wherein both sales and earnings topped estimates and improved year over year. This also marked the company’s fourth straight earnings beat.
Overall, shares of the company have substantially outperformed the Zacks categorized Retail – Miscellaneous/Diversified industry in the past one year. While Big 5 Sporting has gained a solid 84.2%, the industry has witnessed a drop of 4.6%.
Coming back to 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.
Q1 Numbers
Adjusted earnings of 24 cents per share compared with an adjusted loss per share of 2 cents in the prior-year quarter. Additionally, the bottom line substantially surpassed the Zacks Consensus Estimate of 14 cents.
Net sales rose 7.7% to $252.6 million and beat the Zacks Consensus Estimate of $244.3 million. Sales gained primarily from a 7.9% increase in comparable store sales (comps) that benefited from the closure of several rival stores and favorable weather. Further, top-line growth was aided by a calendar shift of the Easter holiday, when the company’s stores are closed, in to the second quarter this year compared with the first quarter in the prior-year.
Comps also benefited from improvements in both customer transactions and average sale. Looking at product categories, the company delivered comps growth in all major categories including apparel, footwear and hardgoods.
Costs & Margins
Gross profit came in at $83.6 million, up 17.7% from the comparable year-ago level. Moreover, gross profit margin expanded 280 basis points (bps) to 33.1% in first-quarter 2017. Gross margin growth was driven by a 228 bps improvement in merchandise margins and lower store occupancy, and distribution costs, as a percentage of sales.
Selling, general and administrative (SG&A) expenses, as a percentage of sales, declined 90 bps to 29.5%. On a dollar basis, SG&A expenses increased about 4.8% to $74.6 million, owing to higher employee labor and benefit expense.
Consequently, the company’s operating profit of $9 million compared favorably with an operating loss of $254 in the prior-year quarter.
Financial Position
Big 5 Sporting had cash of $5.9 million, long-term debt of $21.8 million, and total shareholders’ equity of $206.8 million as of Apr 2, 2017.
Dividend & Share Repurchase
Big 5 Sporting remains committed to returning cash to share holders by paying dividends and share repurchases. Concurrent to the earnings release, management announced a quarterly cash dividend of 15 cents per share, payable on Jun 15 to shareholders on record as of Jun 1.
Store Update
During the quarter, Big 5 Sporting opened one relocated store and shuttered two stores, one of which was relocation. The company ended first-quarter 2017 with 431 stores. Further, in second-quarter 2017, the company opened one store and plans to open one more store through the rest of the quarter. In fiscal 2017, Big 5 Sporting expects to open roughly eight new stores, while closing down three.
Outlook
Management remains impressed with the solid start to the second quarter and believes it is well positioned for the summer selling season driven by 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. Further, it envisions earnings in the range of 14–20 cents per share compared with earnings of 10 cents in the prior-year quarter. The company expects results for the second quarter to include a negative impact from the calendar shift of Easter and Fourth of July holidays into the second quarter.
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
Zacks Rank
Big 5 Sporting currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the retail sector include The Children’s Place Inc. (PLCE - Free Report) , Build-A-Bear Workshop Inc. (BBW - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), and The Michaels Companies Inc. , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Children's Place has an average positive earnings surprise of 39% in the trailing four quarters. The stock, with a long-term EPS growth rate of 8%, has seen positive estimate revisions in the last 60 days.
Build-A-Bear, with long-term EPS growth rate of 22.5%, has an average positive earnings surprise of 67.5% in the trailing four quarters.
Michaels Companies’ long-term EPS growth rate of 16% and solid positive estimate revisions in the past 60 days help it stand strong in the industry.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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