Big Lots, Inc. (BIG) has soared to new highs since I last reviewed it in Dec 2009. However, the stock still has value characteristics despite the big stock move.
Big Lots is a closeout value retailer which sells a broad range of products including seasonal items, furniture, housewares, toys, electronics, home decor and tools.
The company has 1361 Big Lots stores in 47 states and also sells merchandise through its web site, www.biglots.com. It also has wholesale operations through Big Lots Wholesale, Consolidated International and Wisconsin Toy.
Big Lots Had Record Results Across Several Metrics
On Mar 3, Big Lots reported fourth quarter fiscal 2009 results which surprised on the Zacks Consensus for the fourth quarter in a row by 2.3%. Earnings per share were $1.31 compared to the Zacks Consensus of $1.28 per share.
Sales rose 7% to $1.46 billion from $1.37 billion in the fourth quarter of fiscal 2008. Comparable store sales for stores open at least two years rose 5.1%.
It was the largest fourth quarter comparable store sales increase in the last 10 years.
Big Lots has piled up the cash. At the end of the fiscal fourth quarter the company had cash and cash equivalents of $284 million, up from $35 million at the end of 2008.
It also had no borrowings under its credit facility whereas the year before it had borrowed $62 million.
Zacks Consensus Estimates Rise
The company provided a fiscal 2010 earnings outlook in March of $2.65 to $2.75 per share. This is assuming comparable store sales growth of 3% to 4%.
Given the outlook and the fourth quarter results, analysts moved to raise estimates for fiscal 2010.
The Zacks Consensus for the full year jumped to $2.73 from $2.59 in the last 2 months although one estimate has been revised lower in the past 30 days. This is at the higher end of the company’s guidance range.
Analysts see earnings growth of 15.2% in 2010.
Value Fundamentals
The stock is trading with a forward P/E of 14.3, which is more expensive than when I reviewed the company in December.
Back then, it was trading at just 12.9 times forward earnings. But it is still within the value parameters at this level.
Big Lots also has an excellent 1-year return on equity (ROE) of 22.1% which is higher than the industry average of 18.8%. The company is now a Zacks #2 Rank (buy) stock.
Big Lots is scheduled to report fiscal first quarter results on May 27.
5-Year Chart
Big Lots is at 5-year highs as the retail sector, especially in the discount retail category, continues to be hot.
Read the Dec 9, 2009 article.
Update to Previous Value Zacks Rank Buy Stocks
Avnet, Inc. (AVT) recently announced it was merging in an all cash deal with Bell Microproducts as global growth returns to the technology sector. AVT trades at just 12.6x forward earnings. Read the full article.
Teck Resources Limited (TCK) is profiting from the rise in commodity prices as it saw record revenue in the fourth quarter of 2009. TCK is trading with a forward P/E of 13.1. Read the full article.
JoS. A. Bank Clothiers, Inc. (JOSB) built momentum during the dark retail days of 2009 and posted record sales for the year. JOSB is trading with a forward P/E of 14.2. Read the full article.
Par Pharmaceutical Companies Inc. (PRX) has surprised on the Zacks Consensus Estimate 4 quarters in a row by an average of 47%. PRX is trading with a forward P/E of only 12.6. Read the full article.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.
