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Can Big 5 Sporting (BGFV) Pull a Surprise in Q2 Earnings?

Big 5 Sporting Goods Corporation BGFV is slated to release second-quarter 2017 results on Aug 1. The question lingering in investors’ minds is whether this sporting goods company will be able to deliver a positive earnings surprise in the quarter to be reported. The company boasts a spectacular earnings surprise history, as it has outperformed estimates in each of the trailing four quarters, with an average beat of 94.5%. Let’s see how things are shaping up prior to this announcement.

What to Expect?

The current Zacks Consensus Estimate for the quarter under review is pegged at 19 cents, reflecting year-over-year increase of a whopping 72.7%. We note that our earnings estimate has remained stable in the last 30 days. Further, analysts polled by Zacks expect revenues of $251.8 billion, up over 4% from the year-ago quarter.

Big 5 Sportingforms part of the Retail–Wholesale sector. Per the latest Earnings Trends, the sector’s earnings are expected to dip 0.2%, while revenues are expected to climb 3.9%.

Factors at Play

Big 5 Sporting marked its fourth straight earnings beat in the last reported quarter, wherein the company gained from competitive rationalization in the industry due to the liquidation of rivals Sports Authority and Sport Chalet. This aided comparable store sales (comps) performance and merchandise margins in the first quarter and is also expected to continue driving results. For second-quarter 2017, the company projected comps to increase in the mid-single digit range, while earnings per share is envisioned in the range of 14 – 20 cents, as compared with 10 cents recorded in the prior-year quarter.

However, management had earlier informed that calendar shift of Easter and July 4 holidays into the second quarter are likely to hurt results. It looks like this has hurt investors’ sentiment, as shares of this California-based retailer have tumbled 7.6% over the last five trading sessions. Moreover, this has caused the company to plunge 35.9% so far this year, underperforming the industry’s decline of 12.1%. Given this bearish stance, we prefer to wait and see if Big 5 Sporting can manage to maintain its solid earnings trend this time.



What the Zacks Model Unveils?

Our proven model does not conclusively show that Big 5 Sporting is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Big 5 Sporting currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company has an Earnings ESP of 0.00% as, both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 19 cents. The combination of Big 5 Sporting’s Zacks Rank #3 and ESP of 0.00% makes surprise prediction difficult.

Stocks with Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Dollar General Corporation DG has an Earnings ESP of +0.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco Wholesale Corporation COST has an Earnings ESP of +0.50% and a Zacks Rank #3.

Nordstrom, Inc. JWN has an Earnings ESP of +3.28% and a Zacks Rank #3.

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Nordstrom, Inc. (JWN): Free Stock Analysis Report
 
Dollar General Corporation (DG): Free Stock Analysis Report
 
Costco Wholesale Corporation (COST): Free Stock Analysis Report
 
Big 5 Sporting Goods Corporation (BGFV): Free Stock Analysis Report
 
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