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Big 5 Sporting Goods: Looking For Sustainable Earnings Level

Caffital Research profile picture
Caffital Research


  • Big 5 Sporting Goods has struggled to generate a healthy margin and has seen a decline in stock price over the past as a result.
  • The company's revenues have decreased in recent quarters due to a slowdown after a pandemic-boosted sales level and macroeconomic issues.
  • Big 5 seems to be priced for the mentioned issues, with a DCF model pointing towards a fairly valued stock - I have a hold-rating for the time being.

Mannequin at sports store


Big 5 Sporting Goods (NASDAQ:BGFV) sells sporting goods in the United States. The company's financials have seen their fair share of turbulence, as the company struggles to generate a healthy margin. I believe the issues are priced into the stock, though; I have

This article was written by

Caffital Research profile picture
I write mostly about small cap companies in the United States, focusing on a thorough explanation on valuation. My investment philosophy revolves around the DCF model, and analysis that leads into my assumptions used in the model. The approach doesn't limit my investment philosophy into either growth or traditional value investing - rather, I factor in both into my thesis, revolving my theses on a large-scale picture instead of single catalysts.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (5)

25 cents quarterly dividend!
Alan Brochstein, CFA profile picture
I am very bearish on stocks, but I am recently long BGFV. You missed the biggest point for me: The low debt company (with net cash on the balance sheet) trades below tangible book value. Must be burning cash, right? No!
Caffital Research profile picture
@Alan Brochstein, CFA Book value alone doesn't make an investment worthy, though - Big 5 needs to generate a sufficient return on equity, too. The stock could be very promising if the earnings level jumps significantly, but for now the stock seems very risky (although has potential).
Alan Brochstein, CFA profile picture
@Caffital Research I am not a fan of just book value, and I don't use book value. Rather I use tangible book value. Long-term investors can find bargains in solid companies that trade below tangible book value due to near-term pressure. You did not suggest that there is big competition or the death of the category.
They have no path to success
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