Can Big Lots (BIG) Keep the Earnings Streak Alive in Q3? – Analyst Blog

We expect the broadline closeout retailer, Big Lots Inc. ( BIG ) to beat expectations when it reports third-quarter fiscal 2014 results on Dec 5, 2014.

Why a Likely Positive Surprise?

Our proven model shows that Big Lots may beat earnings because it has the right combination of 2 key components.

Zacks ESP: Big Lots currently has an Earnings ESP of +60.00%. This is because the Most Accurate estimate stands at a loss of 2 cents per share, while the Zacks Consensus Estimate is pegged at a loss of 5 cents.

Zacks Rank: Big Lots carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 and 3 have a higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of Big Lots' Zacks Rank #3 and Earnings ESP of +60.00% makes us confident of a positive earnings beat.

What's Driving Better-than-Expected Earnings?

Big Lots continues to focus on furniture financing program as well as the food and consumables categories, as these continue to gain traction. Roll out of furniture financing to 1,300 stores was completed way back in June. Also, management has been expanding assortment in this category by including lawn and garden items, such as patio furniture, gazebos and gas grills.

Moreover, to tap the opportunities presented by food and consumables categories, management has been adding more brands and has revamped its food department by giving it a fresh look to make shopping convenient for customers. Also, the company has actively been rolling out cooler/freezer facility to expand merchandise of food-related items to target food stamp recipients. All these initiatives make us upbeat about the upcoming results.

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Can Big Lots (BIG) Keep the Earnings Streak Alive in Q3? - Analyst Blog