Big Lots Inc (NYSE:BIG): Has Recent Earnings Growth Beaten Long-Term Trend?
After reading Big Lots Inc’s (NYSE:BIG) most recent earnings announcement (28 October 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. View our latest analysis for Big Lots
How Did BIG’s Recent Performance Stack Up Against Its Past?
I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique enables me to examine various companies in a uniform manner using the most relevant data points. For Big Lots, its most recent bottom-line (trailing twelve month) is US$175.04M, which compared to the previous year’s figure, has risen by 11.20%. Since these figures may be fairly nearsighted, I’ve calculated an annualized five-year figure for Big Lots’s net income, which stands at US$165.40M This shows that, generally, Big Lots has been able to gradually grow its earnings over the past few years as well.
How has it been able to do this? Let’s see if it is only a result of an industry uplift, or if Big Lots has seen some company-specific growth. Over the past couple of years, Big Lots top-line expansion has outstripped earnings and the growth rate of expenses. Though this resulted in a margin contraction, it has cushioned Big Lots’s earnings contraction. Inspecting growth from a sector-level, the US multiline retail industry has been growing its average earnings by double-digit 18.26% over the past twelve months, and a more muted 3.14% over the past five years. This means that any uplift the industry is deriving benefit from, Big Lots has not been able to reap as much as its average peer.
What does this mean?
Big Lots’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Big Lots to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for BIG’s future growth? Take a look at our free research report of analyst consensus for BIG’s outlook.
2. Financial Health: Is BIG’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 28 October 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
