Big Lots (BIG): Can It Surpass Estimates In Q3 Earnings?

Big Lots Inc. (NYSE:BIG) is scheduled to report third-quarter fiscal 2016 results on Dec 2, before the opening bell.

In the preceding quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 15.6%. Notably, Big Lots surpassed the Zacks Consensus Estimate in the trailing four quarters by an average of 8%. Let’s see how things are shaping up prior to this announcement.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Big Lots is likely to beat 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. Big Lots has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 2 cents. While the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Factors Influencing this Quarter

Big Lots’ impressive earnings surprise history, comparable-store sales growth in the past ten straight quarters and an encouraging earnings outlook for fiscal 2016 are clear indicators of the company’s strategic endeavors being well on track to continue the momentum. Further, the company’s furniture financing programs as well as the food and consumables categories have been consistently gaining traction.

In fiscal 2016, management anticipates comps to increase in the range of 1% to 2% in comparison to previous guidance in the low-single-digit range. The company anticipates sales to increase slightly. For the fiscal third quarter, the company expects adjusted loss of 4 cents to adjusted profit of a penny per share. Comps are expected to be in the range of flat to up 2%.

However, Big Lots, which operates in a highly competitive discount retail business, faces stiff competition from other general merchandise, discount, food, dollar store and online retailers. Consequently this is likely to result in loss of market share as well as fall in sales and operating margins.

Other Stocks that Warrant a Look

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:

Sanderson Farms, Inc. (NASDAQ:SAFM) has an Earnings ESP of +4.48% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ascena Retail Group Inc. (NASDAQ:ASNA) carries a Zacks Rank #3 and has an Earnings ESP of +14.29%.

Express Inc. (NYSE:EXPR) has an Earnings ESP of + 8.33% and also carries a Zacks Rank #3.

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