Big Lots Inc. BIG came up with a positive earnings surprise for the fourth consecutive quarter, as the company reported third-quarter fiscal 2016 results. The company’s shares have comfortably outperformed the Zacks Categorized Retail Wholesale industry with an average year-to-date return of 33.3% compared with 2.8% for the industry.
Further, the company is anticipated to carry the momentum ahead as it raised its fiscal 2016 guidance. The Zacks Rank #2 (Buy) company’s recent performance speaks volumes of its popularity among investors. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company reported adjusted earnings per share of 4 cents in comparison to break-even reported in the prior-year quarter. Moreover, the company’s bottom-line surpassed the Zacks Consensus estimate of a loss of 2 cents. Further, earnings surpassed the company’s guided range of a loss of 4 cents to a profit of 1 cent. Segments like furniture, mattresses, upholstery and case goods were the top performers during the quarter.
On the other hand, revenues of $1,105.5 million missed the Zacks Consensus Estimate of $1,118 million and also declined 1% from the year-ago figure, primarily due to lower store count in comparison to prior-year quarter.
Big Lots’ which has registered comparable sales growth in the last ten consecutive quarters, reported flat comps in third-quarter fiscal 2016.
The company’s gross profit grew 0.5% year over year to $442 million. Gross margin came in at 40% in comparison to year-ago figure of 39.4%. Operating profits totaled $1.9 million compared with an operating loss of $2.2 million recorded in the prior-year quarter.
BIG LOTS INC Price, Consensus and EPS Surprise
BIG LOTS INC Price, Consensus and EPS Surprise | BIG LOTS INC Quote
Other Financial Details
Big Lots ended the quarter with cash and cash equivalents of $59.7 million, down 2.9% year over year. Inventories were down 1% to $1,036.3 million. Total shareholder equity at the end of the quarter decreased 14.5% year over year to $545.1 million.
In the quarter under review, the company closed seven stores and opened four. As of Oct 29, 2016, Big Lots operated 1,442 stores.
Long-term obligations under the bank credit facility totaled $362.9 million at the end of the quarter under review.
On Dec 2, the company’s board of directors had declared a quarterly cash dividend of 21 cents. The dividend will be paid on Dec 30, to shareholders on record as of Dec 16, 2016.
Guidance
The company raised its fiscal 2016 guidance. For the fiscal, adjusted earnings per share are projected in the band of $3.55 to $3.60 as against the previous guidance of $3.45 to $3.55. This compares with $3.01 per share recorded in fiscal 2015. The Zacks Consensus Estimate for earnings for fiscal 2016 is pegged at $3.54, which is likely to witness upward revisions in the coming days.
In fiscal 2016, comps are anticipated to increase in the range of 1% to 2%. The company expects sales to increase slightly. Additionally, the company expects cash flow generation of $195 million in fiscal 2016, down from previous estimate of $210 million.
For the fiscal fourth quarter, the company continues to expect earnings per share from continuing operations in the range of $2.18 to $2.23 per share. Comps are anticipated to be in the range of flat to up 2%. The Zacks Consensus Estimate for fiscal fourth-quarter earnings is pegged at $2.22 per share.
Other Stocks to Consider
Other stocks which warrant a look include The Children's Place, Inc. PLCE, sporting a Zacks Rank #1 while Zumiez Inc. ZUMZ and Nordstrom Inc. JWN, both carry a Zacks Rank #2.
Children's Place has an average positive earnings surprise of 36.3% in the trailing four quarters. The stock, with a long-term growth rate of 10.3%, has seen positive estimate revisions in the last 30 days.
Zumiez has a long-term earnings growth rate of 15% and the company’s earnings have surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average beat of 30.9%.
Nordstrom’s long-term EPS growth rate of 9.7% and positive estimate revisions for the current fiscal in the past 30 days aid it to stand strong in the industry. Moreover, the company has delivered back-to-back earnings beat in the last two quarters.
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