Will Soft Comps Hamper Big 5 Sporting (BGFV) Q3 Earnings?

Big 5 Sporting Goods CorporationBGFV is slated to release third-quarter 2017 results on Oct 31. The question lingering in investors' minds is whether this sporting goods company will be able to deliver a positive earnings surprise in the quarter to be reported.

The company boasts of a spectacular earnings surprise history, as it has outperformed estimates in three of the trailing four quarters, with an average beat of 19.9%. However, the company delivered a negative earnings surprise of 31.6% in the preceding quarter. Let's see how things are shaping up prior to this announcement.

Big 5 Sporting Goods Corporation Price and EPS Surprise

Big 5 Sporting Goods Corporation Price and EPS Surprise | Big 5 Sporting Goods Corporation Quote

What to Expect?

The current Zacks Consensus Estimate for the quarter under review is pegged at 28 cents, reflecting year-over-year decline of 32.5%. We note that our earnings estimate has remained stable in the last 30 days. Further, analysts polled by Zacks expect revenues of $271.4 billion, down 2.7% from the year-ago quarter.

Moreover, we note that the stock has underperformed the industry in the last three months. The company's shares have decreased 33.9%, while the industry declined 7.6%.

Big 5 Sporting forms part of the Retail-Wholesale sector. Per the latest Earnings Preview , the sector's earnings are expected to dip 2.2%, while revenues are expected to climb 5.8%.

Factors at Play

Big 5 Sporting is not immune to the turmoil in the sporting goods industry, which has compelled companies selling athletic goods to scramble for options to gain business. This El Segundo, CA-based company had seen good times last year following significant market share gain owing to the consolidation and closure of smaller rival stores. However, cycling of benefits from the increased sales witnessed last year owing to closure of rival stores, along with a challenged industry impacted the second-quarter 2017 results.

Additionally, diminished demand for some hardgoods product categories, mainly linked to firearms, camping and water sports hurt the top line in the preceding quarter.

Going forward, Big 5 Sporting expects sales comparisons to remain tough in the third quarter due to the cycling of benefits from increased sales witnessed in the prior-year quarter related to the closure of rival stores. It also anticipates the retail environment to remain challenging. Consequently, it guided comparable store sales (comps) to decline in the low-single digit range for the third quarter, in line with the Zacks Consensus Estimate of 3% decline. Moreover, earnings are envisioned in the range of 22-32 cents per share, compared with the Zacks Estimate of 28 cents.

However, the company expects results for the third quarter to include a slight benefit due to the calendar shift of the Fourth of July holiday.

Given the overall bearish outlook, we prefer to wait and see if Big 5 Sporting can manage to pull an earnings surprise this time.

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 positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Big 5 Sporting currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 28 cents. The combination of Big 5 Sporting's Zacks Rank #3 and ESP of 0.00% makes surprise prediction difficult.

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:

Ralph Lauren Corporation RL has an Earnings ESP of +2.63% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Pinnacle Foods Inc. PF has an Earnings ESP of +2.03% and a Zacks Rank #2.

Big Lots Inc. BIG has an Earnings ESP of +15.39% and a Zacks Rank #2.

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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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