Shares of Big Lots, Inc. (BIG) plunged on Friday after the company released third-quarter results that missed the mark. Is now a good opportunity to buy Big Lots on the dip?
Big Lots’ Company Profile
Big Lots has been in business for nearly 50 years. Big Lots provides merchandise ranging from food to furniture.
As of October 2014, Big Lots operates in 48 states with more than 1,400 locations. Big Lots also employs more than 13,000 full-time employees.
Yield-seekers may like to know that Big Lots has a 1.7% dividend yield, and that it’s set to go ex-dividend on Dec. 12. Shareholders of record will receive 17 cents per share.
Big Lots’ Earnings Rundown
Last Friday, Big Lots reported that it missed third-quarter consensus estimates. Big Lots posted a 6 cents per share loss or a $3.44 million net loss. This was worse than expected; analysts had estimated a loss of 5 cents per share.
While the results weren’t stellar, current third-quarter results were a substantial improvement compared to the same quarter last year, when Big Lots reported a net loss of 17 cents per share. Big Lots also reported a 0.2% year-on-year increase in net sales by to $1.11 billion, which just missed analysts’ sales estimates of $1.12 billion.
Looking ahead to the fourth quarter, Big Lots lifted its earnings-per-share guidance to a range of $1.70 to $1.80 per share. Analysts estimate that the average earnings for Big Lots will be $1.78 per ahead on revenues of $1.40 billion.
For the full fiscal year, Big Lots estimates income from operations to range from $2.40 to $2.50 per share and sales growth between 1% and 2%. Consensus estimates for full-year 2014 earnings is $2.49 per share on revenues of $5.19 billion.
Big Lots’ Current Ratings
Over the 12 months, BIG stock has been on an upward trajectory, starting off the year in “sell” territory and edging up to a “buy” rating, which can be attributed to an uptick in buying pressure. Big Lots earns an impressive “A” for its Quantitative Grade.
Meanwhile, Big Lots’ fundamentals are not as strong, but there are bright spots. BIG stock earns “Bs” for return on equity, cash flow and earnings momentum. Big Lots’ other rankings could use some improvement. Sales growth, operating margin growth and earnings growth all earn “Ds.” Meanwhile, earnings surprises and analysts’ earnings revisions earn “C” grades. Overall, Big Lots earns a “C” for its Fundamental Grade.
So, if you buy Big Lots stock, I’d keep a close watch on its fundamentals. As of this posting, Dec. 8, I consider BIG a “B-rated (cautious) buy.”
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
