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Big Lots (BIG) Lined Up for Q1 Earnings: Key Things to Note

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Big Lots, Inc. BIG is likely to witness an increase in the top and bottom lines when it reports first-quarter fiscal 2021 numbers on May 28. The Zacks Consensus Estimate for revenues is pegged at $1,564 million, suggesting growth of 7.2% from the prior-year quarter’s reported figure. In the last reported quarter, the company witnessed an 8.1% increase in revenues.

The Zacks Consensus Estimate for earnings has increased 9.8% over the past 30 days to $1.79 per share, which suggests growth of 42% from the figure reported in the prior-year period. The company has a trailing four-quarter earnings surprise of 57.3%, on average. In the last reported quarter, Big Lots delivered an earnings surprise of 3.6%.

Big Lots, Inc. Price, Consensus and EPS Surprise

Big Lots, Inc. Price, Consensus and EPS Surprise
Big Lots, Inc. Price, Consensus and EPS Surprise

Big Lots, Inc. price-consensus-eps-surprise-chart | Big Lots, Inc. Quote

Key Factors to Note

Strong business growth endeavors including efforts to boost online sales have been aiding the company, as witnessed during the fourth quarter of fiscal 2020. Also, on its last earnings call, management said that it expects a low-single-digit rise in comparable sales (comps) during the first quarter. Moreover, total sales are expected to have grown approximately 80 basis points higher than the lift in comparable sales. Based on the comps growth assumption, the company anticipates earnings of $1.30-$1.45 per share compared with $1.26 reported in the prior-year quarter.

Notably, Big Lots has been gaining from its transformation initiative, referred to as Operation North Star, which encompasses driving top-line growth, cost containment, and enhancement in systems and infrastructure. Further, the company is experiencing strong e-commerce growth, buoyed by the success of the “Buy Online Pick-up In Store” (BOPIS) functionality. Additionally, during 2020, the company introduced curbside pickup, same-day delivery in partnership with Instacart and same-day delivery with biglots.com with pickup. The company’s Instacart and pickup delivery services continued to accelerate during the fourth quarter, making a significant contribution to its overall e-commerce-driven growth. These upsides bode well for the quarter under review. Apart from these, Big Lots’ Store of the Future and new stores strategy are worth a mention.

That being said, we cannot ignore the challenges related to high freight costs. Management expects freight costs to have served as a headwind in first-quarter fiscal 2021 as well. Moreover, adverse mix impacts stemming from the company’s pantry optimization strategy are likely to have weighed on the gross margin during the quarter. Additionally, pandemic-related costs and soft store traffic are concerns.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Big Lots this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Big Lots currently has a Zacks Rank #3 and an Earnings ESP of +6.70%.

Other Stocks With Favorable Combinations

Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season.

Dollar General DG has an Earnings ESP of +0.94% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco COST has an Earnings ESP of +2.75% and a Zacks Rank #3.

Burlington Stores BURL has an Earnings ESP of +8.49% and a Zacks Rank #3.

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