Every analyst covering Big 5 Sporting Goods Corp. (BGFV) has raised earnings estimates in the past 30 days, following back-to-back quarters with positive surprises for this sporting goods retailer. Shares have been gaining since mid-June as well. This Zacks #2 Rank (Strong Buy) looks to be an attractive pick given its encouraging forward guidance, store expansion plan, strong estimate revisions and robust long-term earnings growth projection of 11.3%.
Solid Q3 Results
On November 1, Big 5 Sporting Goods Corp. posted third-quarter earnings per share of 39 cents, surpassing the Zacks Consensus Estimate by 21.9%.
Net sales of $251.8 million rose 7.3% from the prior-year quarter and also beat the Zacks Consensus Estimate of $247 million. Sales mainly benefited from the calendar shift of the 4th July holiday into the third quarter, as well as the company’s ongoing merchandise and marketing initiatives.
Same-store sales increased 5.0% over the prior-year quarter, driven by improvement across all geographies and the major product categories of apparel, footwear and hard goods.
Gross profit increased 9% to $83.9 million, while gross profit margin expanded 50 basis points to 33.3%. Selling and administrative expenses grew 4.3% to $70.4 million driven by an increase in store related expenses. Consequently, operating income advanced 42.1% to $13.5 million, while operating margin expanded 140 basis points to 5.4%.
Management expects earnings per share in the fourth quarter to range from 13 cents to 21 cents per share, with same store sales in the mid-single digits. For fiscal 2012, the company plans to open nearly 14 new stores, of which three will be relocations.. At year-end, the company’s total store count is expected to reach 414.
Earnings Momentum on the Rise
The Zacks Consensus Estimate for fiscal 2012 rose 14.8% to 70 cents per share in the past 30 days, as all 5 estimates were revised upwards. This represents a year-over-year increase of 52.2%. The Zacks Consensus Estimate for fiscal 2013 grew 11.5% to 87 cents over the same time frame as all 6 estimates were raised, reflecting a year-over-year increase of 24.3%.
The chart below indicates steady growth in the company’s share price since mid-June, reflecting an upside of about 123.9%. Furthermore, shares have gained 38.6% year-to-date.
Shares of Big 5 Sporting Goods have consistently traded above its 200-day moving average since August 27, 2012. Barring a few occasions, the stock has also remained above the 50-day moving average since June 25, 2012. Moreover, the company has outperformed the S&P 500 Index. Volume is fairly strong, averaging roughly 181K daily.
Based in El Segundo, California, Big 5 Sporting Goods Corp. operates as a sporting goods retailer in the western U.S. The company offers athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, tennis, golf, snowboarding, and in-line skating. Big 5 stores have nationally recognized brands, such as Nike, Reebok, Adidas, New Balance, Coleman, Rollerblade, Spalding and Wilson. The company also offers private label merchandise manufactured exclusively for its stores. Founded in 1955, the company currently operates 407 stores across 12 states in the U.S. The company has a current market cap of $295 million.