Shares of Borders Group, Inc. (BGP) gained more than 11% during a solid session for the market, making this bookseller a top-performing Zacks #1 Rank stock for Monday.

There are several retail-related companies on today’s Zacks #1 Rank List (which includes 225 stocks), but only 3 are from the retail – miscellaneous/diversified industry. In addition to BGP, those companies include Bed Bath & Beyond Inc. (BBBY) and Jo-Ann Stores, Inc. (JAS).

BGP is moving on volume of nearly 208,000, which is well below the average of 639,000.

Earnings Estimates

Profit expectations for this fiscal year and next haven’t moved in the past month, but remain dramatically higher than 2 months ago.

For the year ending January 2010, analysts currently predict a profit of 3 cents per share; a remarkable turnaround from 60 days ago when expectations called for a loss of 50 cents.

Similarly, BGP is expected to earn 10 cents per share for the year ending January 2011, compared to an anticipated loss of 40 cents 2 months ago.

Analysts are, therefore, calling for a year-over-year gain of more than 230% next fiscal year over this fiscal year.

For its fiscal second quarter, which ends this month, BGP is currently expected to lose 16 cents per share. In the year-ago quarter, it lost 18 cents.

Financial Structure Helped Fiscal Q1

BGP didn’t get out of its fiscal first quarter unscathed by the difficult environment, but it was able to improve its cash flow, debt and adjusted EBITDA. This helped the company report a loss from continuing operations of 27 cents, which was far better than the consensus’ loss estimate of 50 cents. In fact, that marked a 46% improvement and its second straight quarter with a positive surprise.

However, sales did drop by approximately 12%.

The company understands that it can’t save its way to prosperity, and stated that its focus is on doing a better job of driving sales.

Zacks Investment Research