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Big 5 Sporting (BGFV) Q4 Earnings: Disappointment in Store?

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Sporting goods retailer, Big 5 Sporting Goods CorporationBGFV is all set to report fourth-quarter 2016 results, after the closing bell on Feb 28, 2017. The question lingering in investors' minds is, whether the company will be able to maintain its positive earnings streak in the to-be-reported quarter. In the trailing four quarters, Big 5 Sporting has outpaced the Zacks Consensus Estimate by an average of 4.8%.

However, we note that the stock has considerably underperformed the Zacks categorized Retail - Miscellaneous/Diversified industry over the past three months. While shares of Big 5 Sporting declined 30.2%, the industry fell 5.2%. In fact, the stock has also underperformed the broader Retail-Wholesale sector that increased 3.6% in the said time period.

Big 5 Sporting forms part of the Retail-Wholesale sector. As per the latest Earnings Preview , total earnings for the sector are estimated to decline 1.2%, while revenues are projected to improve 4.7%.

Let's delve deeper how things are shaping up for this announcement.

Which Way are Estimates Treading?

Let's look at earnings estimate revisions in order to get a clear picture of what analysts are thinking about the company right before earnings release. The Zacks Consensus Estimate of 32 cents and 81 cents for the fourth quarter and 2016 has declined 2 cents and 3 cents, respectively, over the past seven days. Further, the current Zacks Consensus Estimate for the impending quarter and 2016 are pegged higher than 22 cents and 77 cents delivered in the year-ago quarter and 2015, respectively.

What the Zacks Model Unveils?

Our proven model does not conclusively show that Big 5 Sporting is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You may uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

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

Big 5 Sporting has an Earnings ESP of -21.88%. This is because the Most Accurate estimate of 25 cents stands well below the Zacks Consensus Estimate of 32 cents. Moreover, the company has a Zacks Rank #4 (Sell).

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

Factors Influencing the Quarter

Big 5 Sporting recently posted dismal sales results for the fourth quarter and 2016. Net sales for the fourth quarter declined 3.2% to $266.3 million from $275 million in the year-ago quarter. Also, the company reported net sales of $1.02 billion for 2016, falling a penny short of the prior-year figure.

However, comparable-store sales (comps) rose 3.1% and 1.7% from the prior-year quarter and 2015, respectively. Comps for the period gained mainly from the rise in both customer transactions and average sales owing to the company's actions to capitalize on the opportunities presented by the rationalization in the retail sporting goods industry. Also, comps in the quarter benefited from the improved merchandise margins.

Despite dismal sales, the company's comps remained encouraging which led it to raise the lower end of its fourth quarter earnings outlook. Management now expects fourth-quarter earnings per share in the band of 34-35 cents, compared with the previous guidance of 25-35 cents. Further, earnings per share are envisioned in the in the range of 76-77 cents for fiscal 2016.

Stiff competition and promotional challenges related to the industry consolidation remain major concerns for Big 5 Sporting. Furthermore, the company's seasonal nature and risks related to sourcing merchandise from foreign countries may weigh upon its performance.

Stocks Poised to Beat Earnings Estimates

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

Burlington Stores, Inc. BURL has an Earnings ESP of +1.18% and sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Costco Wholesale Corporation COST has an Earnings ESP of +0.74% and a Zacks Rank #3.

Best Buy Co., Inc. BBY has an Earnings ESP of +1.81% and a Zacks Rank #3.

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


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

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