Big Lots, Inc (NYSE: BIG)
Earnings Report
Before the market opened on Friday, Big Lots (BIG) reported a loss of 1 cent per share compared to 6-cent loss the same quarter last year while revenue came in at $1.12 billion. Both earnings and revenue were in line with analyst estimates, however, it did not sit well with the market as shares began to sell off after the release in the premarket session. BIG raised its outlook for the year to $3 per share from the previous guidance of $2.95 with comparable-store sales estimated to increase 1-2%. This wasn’t a terrible earnings and it looks like the market may have overreacted a little bit.
CEO and President David Campisi was pleased with the company’s progress and had this to say during the conference call,
“I am pleased with our report this morning, as we delivered third quarter results solidly in line with our financial guidance and commitments to our shareholders. Historically, Q3 has been challenging for us, as our business transitions out of the summer months and we start to prepare for the all-important holiday season. But for the second consecutive year, comps in Q3 increased, up 2.6% this year which is on top of a 1.4% increase last year.” NASDAQ
BIG also received mixed analyst reviews as they were downgraded at Piper Jaffray but upgraded at Barclays with an average target price of $55.56 amongst analysts covering the Co. I personally want to see them reclaim $40 before I even consider a trade in this stock. Fundamentally, the company is doing ok but technically the chart is beat down and doesn’t look healthy at all. The only good part about where the share price is trading is that it is resting on the weekly 200 day at $39.31 that should provide it plenty of support and a decent level to trade off of.
BIG Technicals
BIG sold off hard for most of the week coming into their earnings day, which could have been a good clue to what the results of their earnings were going to be. Shares quickly sold off in the pre-market session before opening the day at $41.48 and finally found support at $39.07 before trading sideways for the rest of the day and closing at $40.04. Shares are well below the daily 200-day moving average, currently sitting at $46.21, and the RSI is at 31.75 and pointing south. I would sit tight and wait for shares to consolidate and see which way they decide to make their next move. Keep in mind that market weakness could play a factor.
Looking at the bigger picture, BIG started the year off blistering hot with over a ten point run in the first few months before cooling off and trending back down, retracing most of the move up. Shares made another attempt to break new highs back in October but were stopped short at the big $50 resistance level. Earnings rocked the share price and it looks like the $40 should provide some support for now; we’ll have to see if it can hold and get a bounce from here or if it’s going to continue south. All major indicators are pointing south so it’s hard to justify a bullish position especially with the overall market showing weakness. As of the close on Friday, BIG is down less than one percent for the year or just over 20% from the highs back in March.
About Big Lots, Inc.
Big Lots, Inc. operates broad line closeout retail stores. It sells a broad range of quality, brand-name products, including consumables, seasonal items, furniture, housewares, toys, electronics, home decor, tools and gifts. The company operates under following merchandise categories which include Food, Consumables, Soft Home, Hard Home, Furniture & Home Decor, Seasonal, and Electronics & Accessories.. The Food category includes the food and specialty food departments. The Consumables category includes the health and beauty, plastics, paper, chemical, and pet departments. The Soft Home category includes the fashion bedding, utility bedding, bath, window, decorative textile, and flooring departments. The Hard Home category includes small appliances, table top, food preparation, stationery, greeting cards, tools, paint, and home maintenance departments. The Furniture & Home Decor category includes upholstery, mattress, ready-to-assemble, case goods, home decor, and frames departments. The Seasonal category includes lawn and garden, summer, Christmas, toys, books, sporting goods, and other holiday departments. The Electronics & Accessories category includes the electronics, jewelry, apparel, hosiery, and infant accessories departments. Big Lots was founded by Sol A. Shenk in 1967 and is headquartered in Columbus, OH. MarketWatch
