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Factors Likely to Influence Big Lots (BIG) Earnings in Q3

Big Lots, Inc . BIG is slated to report third-quarter fiscal 2018 results on Dec 7. In the trailing four quarters, it has underperformed the Zacks Consensus Estimate by average of 1.5%. In the last reported quarter, this Ohio-based company delivered a negative earnings surprise of 11.9%.

Which Way Are Estimates Heading?

The Zacks Consensus Estimate for the quarter under review is pegged at break-even compared with earnings of 6 cents per share reported in the year-ago quarter. We note that the Zacks Consensus Estimate remained stable in the past 30 days.

The Zacks Consensus Estimate for revenues is $1,139 million, up 2.6% from $1,111 million in the year-ago quarter. We note that total revenues of this Zacks Rank #3 (Hold) company increased 0.2% in the last reported quarter.

Big Lots, Inc. Price and EPS Surprise

Big Lots, Inc. Price and EPS Surprise | Big Lots, Inc. Quote

Factors to Consider

Big Lots is making efforts like e-commerce expansion and "Store of the Future" initiative to expand customer base. The company's e-commerce business marked its highest level of sale and lowest operating loss in the second quarter of fiscal 2018. The Store of the Future initiative, which was launched in 2017, aims at enhancing customer's shopping experience. In this regard, the company intends to remodel 70 stores in the third quarter and 120 stores in fiscal 2018. Robust seasonal performance of the Store of the Future initiative, especially in Phoenix, Charleston, Myrtle Beach and Austin, also bodes well.

Additionally, the company is witnessing strong soft-home performance for the past few quarters, with mid-single digit growth in the last reported quarter. Encouraged by this, Big Lots added brands and also revamped the food department by giving it a fresh look for the convenience of customers. Moving on, one of the company's strongest categories, furniture is also showcasing an increasing sales trend.

Nevertheless, dismal margins are a concern for Big Lots as both gross margin and adjusted operating margin contracted in the last reported quarter. Going into the third quarter, management expects gross margin to remain flat or decline slightly from the prior-year quarter. Adding to the woes, bottom line for the to-be reported quarter is anticipated to be a loss of 6 cents to earnings of 4 cents compared with 6 cents reported in the prior-year quarter.

Stocks With Favorable Combination

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:

Casey General Stores, Inc. CASY has an Earnings ESP of +6.17% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Costco Wholeasale Corporation COST has an Earnings ESP of +1.24% and a Zacks Rank #3.

Zumiez Inc. ZUMZ has an Earnings ESP of +0.69% 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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