Big 5 Sporting Goods Corp.
(
BGFV
), an operator of a sporting goods retailer in the western U.S.,
posted its first-quarter 2012 results on May 1. In the subsequent
paragraphs, we will cover the recent earnings announcement,
analysts' estimate revisions as well as the Zacks Rank and
long-term recommendation on the stock.
Review of the Last Quarter
Big 5 reported disappointing first-quarter 2012 results, below
the Zacks Consensus Estimate. The dismal results were mainly due to
unfavorable winter weather in most markets, where the company
operates.
The quarterly earnings of 1 cent per share were below the Zacks
Consensus Estimate of 3 cents per share. However, earnings for the
quarter dropped 92.3% from 13 cents per share reported in the
comparable quarter last year and were near the lower end of the
company's guidance range of break-even to 6 cents per share.
Big 5's net sales of $218.5 million in the reported quarter
slipped 1.2% from the prior-year quarter's sales of $221.1 million,
missing the Zacks Consensus Estimate of $221 million. In the first
quarter, same-store sales dropped 2.9%.
Guidance
Management now expects earnings per share in second-quarter 2012
to range from 5 cents to 11 cents per share compared with 14 cents
per share reported in the comparable quarter last year. Same-store
sales are expected to be up by a single-digit percentage rate.
(Read our full coverage on this earnings report:
Big 5's 1Q Disappoints
)
Agreement of Estimate Revisions
Out of seven analysts covering the stock, five lowered their
estimates, whereas one raised the same for the second quarter of
2012, in the last 30 days. For the third quarter, two analysts made
downward revisions while three moved in the upward direction, in
the last 30 days.
For fiscal year 2012, six out of seven analysts trimmed their
estimates and the remaining one made an upward revision, in the
last 30 days. For fiscal 2013, out of seven analysts, four moved
downward whereas two revised their estimates upwards in the last 30
days.
What Drives Estimate Revision
For second-quarter 2012 and fiscal year 2012 & 2013, most of
the analysts maintained a similar stance following Big 5's
first-quarter 2012 results. Clearly, a negative sentiment is
observed among most of the analysts who are pessimistic on the
stock.
Due to mild winter weather, the company's comparable-store sales
declined 2.9%, leading to a 1.2% dip in total revenue. Moreover,
gross margin remained under pressure due to increased cost of goods
sold. This led to a 92.3% drag in Big 5's earnings to one cent per
share during the quarter. We believe that the significant downside
in earnings has induced the analysts to lower their estimates for
the upcoming quarter.
However, mixed sentiments were palpable among the analysts for
the third quarter of 2012.
Magnitude of Estimate Revisions
The magnitude of estimate revisions by the analysts is clearly
reflected through changes in the Zacks Consensus
Estimates.
The Zacks Consensus Estimate for the second quarter of 2012 have
dropped to 10 cents per share from 14 cents per share, in the last
30 days. However, for the third quarter, earnings improved by a
penny to 30 cents per share from 29 cents, in the last 30 days.
For the fiscal year 2012 and 2013, the Zacks Consensus Estimate
has dropped by 6 cents and 3 cents to 56 cents and 73 cents,
respectively, in the last 30 days.
Closing Comment
Big 5 offers athletic shoes, apparel, accessories and a broad
selection of outdoor and athletic equipment for team sports,
fitness, camping, hunting, fishing, tennis, golf, snowboarding\ and
in-line skating.
Big 5 Sporting is planning to introduce a business intelligence
system, which will help in taking a decision for merchandising and
assortment selection at the store level. Moreover, the company has
opened a new distribution center in Oregon, which will service
about 75 stores in the Pacific Northwest. The new distribution
channel is expected to save about $800,000 in transportation
expense annually.
Big 5 faces intense competition from national players, such as
Dick's Sporting Goods Inc
. (
DKS
) and
Hibbett Sports Inc
.
(
HIBB
), mass merchandisers such
as
Wal-Mart Stores Inc.
(
WMT
) and
Target Corp.
(
TGT
), as well as regional and local sporting goods stores.
Currently, Big 5 carries a Zacks #3 Rank, which translates into
a Hold rating. However, we retain our long-term Neutral
recommendation.
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force impacting
stock prices. He turned this ground breaking discovery into two
of the most celebrating stock rating systems in use today. The
Zacks Rank for stock trading in a 1 to 3 month time horizon and
the Zacks Recommendation for long-term investing (6+ months).
These "Earnings Estimate Scorecard" articles help analyze the
important aspects of estimate revisions for each stock after
their quarterly earnings announcements. Learn more about earnings
estimates and our proven stock ratings at
http://www.zacks.com/education
BIG 5 SPORTING (BGFV): Free Stock Analysis
Report
DICKS SPRTG GDS (DKS): Free Stock Analysis
Report
HIBBET SPORTS (HIBB): Free Stock Analysis
Report
TARGET CORP (TGT): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
Report
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