Soft Sales To Impact Big 5 Sporting's (BGFV) Q4 Earnings

Big 5 Sporting Goods Corporation (NASDAQ:BGFV) is slated to release fourth-quarter 2017 results on Feb 27. 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.

Last quarter, the company delivered earnings in line with the Zacks Consensus Estimate. Also, the company has outperformed estimates in two of the trailing four quarters, with an average beat of 10.8%.

Let’s see how things are shaping up prior to this announcement.

What to Expect?

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 23 cents, reflecting year-over-year decline of 30.3%. We note that the earnings estimate has remained stable in the last 30 days. Further, analysts polled by Zacks expect revenues of $243.2 million down 8.7% from the year-ago quarter.

In the past month, the stock has outperformed the industry. However, the company’s shares have lost 4.8%, much narrower than the industry’s decline of 10.5%.

Factors at Play

Big 5 Sporting’s preliminary sales numbers for fourth-quarter and full-year 2017 suggest that the quarter has been tough for the company. In the fourth quarter, the company continued with its dismal sales trend, with sales numbers lagging estimates and declining year over year. This downturn can be attributed to extremely challenging conditions in December.

Sales in the quarter were hurt by nearly 50% decline in core winter product categories due to warm and dry weather conditions in most of its markets. Consequently, sales of cold weather and snow-related products declined. Furthermore, the company continued to witness awfully soft sales for firearm-related products, which significantly hurt customer traffic across the company’s store fleet. This, in turn, weighed on comparable store sales (comps) and merchandise margins.

As a result, Big 5 Sporting slashed earnings guidance for fourth-quarter and full-year 2017. Moreover, the company notes that the dismal winter weather conditions have continued into the first quarter of 2018, thereby making comparisons with the prior-year period very tough. In fact, this has weakened investors’ outlook for the first quarter.

However, Big 5 Sporting is well on track with its impressive growth strategies and effective merchandising initiatives. In addition, the company’s solid financials underscores strength in its operations.

What the Zacks Model Unveils?

Our proven model does not 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 has an Earnings ESP of 0.00%. Although 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.

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:

DICK’s Sporting Goods Inc. (NYSE:DKS) has an Earnings ESP of +5.54% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Michaels Companies (NASDAQ:MIK) has an Earnings ESP of +2.80% and a Zacks Rank of 2.

Ulta Beauty Inc. (NASDAQ:ULTA) has an Earnings ESP of +0.76% and a Zacks Rank #2.

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