Will Big Lots (BIG) Miss Q2 Earnings on Broad Weakness? - Analyst Blog

By Zacks Equity Research,

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Big Lots Inc. ( BIG ), the broadline closeout retailer, is set to report second-quarter fiscal 2014 results on Aug 29 2014. Last quarter, the company posted a positive earnings surprise of 13.6%.  Let us see how things are developing prior to this announcement.

Factors Affecting this Quarter

Soft economic recovery and sluggish consumer spending especially discretionary continue to mar retail sector, and Big Lots is no exception. Like several retailers the company too has launched a turnaround strategy, which includes cost trimming, online expansion and scaling back operations, to recover the lost momentum. However, these efforts continue to be a time consuming affair.

Earnings Whispers

Our proven model does not conclusively project Big Lots as likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and Zacks Rank #1 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP:   Big Lots currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 30 cents per share.

Zacks Rank: Big Lots' Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat:  

Abercrombie & Fitch Co. ( ANF ) has an Earnings ESP of +10.00% and a Zacks Rank #2 (Buy).

Zoe's Kitchen, Inc. ( ZOES ) has an Earnings ESP of +50.00% and a Zacks Rank #2.

Shoe Carnival Inc. ( SCVL ) has an Earnings ESP of +5.88% and a Zacks Rank #2.

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ABERCROMBIE (ANF): Free Stock Analysis Report

BIG LOTS INC (BIG): Free Stock Analysis Report

SHOE CARNIVAL (SCVL): Free Stock Analysis Report

ZOES KITCHEN (ZOES): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: ANF , BIG , SCVL , ZOES

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