Big Lots, Inc. (NYSE: BIG) stock plummeted more than 8 percent on Friday morning after the company reported a disappointing first quarter across-the-board and issued full-year guidance below market expectations. Despite the tough start to 2018, analysts say Big Lots remains one of the few values for long-term investors in a difficult U.S. retail market.
Big Lots reported first-quarter adjusted earnings per share of 95 cents on revenue of $1.27 billion. Both numbers missed consensus analyst estimates of $1.19 and $1.28 billion, respectively. Revenue was down 1.5 percent from a year ago.
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In addition, same-store sales dropped 3 percent, a much steeper decline than the 0.9 percent drop analysts had anticipated.
Big Lots said it did not repurchase any shares of stock under its new $100 million share repurchase program announced in March, but it did return $14 million to shareholders in the first quarter via dividends.
Looking ahead, Big Lots guided for second-quarter EPS of between 60 and 70 cents and same-store sales growth of between zero and 2 percent.
For the full year, the company is expecting EPS of between $4.50 and $4.70, cash flow of between $110 million and $120 million and same-store sales growth of about 1 percent. Analysts had been expecting full-year EPS of $4.87.
BIG stock slipped 8 percent in early Friday trading to its lowest level in more than two years. The stock is now down 37 percent in the past six months, but some analysts see the dip as a long-term buying opportunity for investors.
CFRA analyst Efraim Levy says Big Lots is a compelling value for investors, and the company is well-positioned to grow sales as its U.S. retail competition shrinks its footprint.
“We see comparable store sales being helped by the roll-out of coolers and freezers, and the implementation of a re merchandising strategy and market share gains from department store competitors’ store closings,” Levy says.
Levy says e-commerce sales should also provide a boost for Big Lots.
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“With new initiatives being implemented and store testing underway, we look for steady progress on these efforts to be made in fiscal 2019 and beyond,” he says.
CFRA has a “buy” rating and $60 price target for BIG stock.
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Big Lots, Inc. Comes Up Small in First Quarter originally appeared on usnews.com
