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Category: Big 5 Sporting Goods (BGFV)
Date: 5 May 2021 Stock Price of Big 5 Sporting Goods (BGFV): $19.07 Market Capital of Big 5 Sporting Goods (BGFV): $425 million We take a look at the 1st quarter earnings report of their 2021 fiscal year of Big 5 Sporting Goods (BGFV) a leading sporting goods retailer in the western United States, operating 430 stores. For the quarter the group reported net sales of $273 million and net income of $21.5 million
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- Steven G. Miller, the Company’s Chairman, President and Chief Executive Officer - We are pleased to report record first quarter results driven by a combination of top line sales strength, merchandise margin expansion and an improved cost structure. Our team continues to do a tremendous job satisfying the incredible consumer demand we are seeing across our diverse product mix"
About Big 5 Sporting Goods
Big 5 is a leading sporting goods retailer in the western United States, operating 430 stores under the “Big 5 Sporting Goods” name as of the fiscal quarter ended April 4, 2021. Big 5 provides a full-line product offering in a traditional sporting goods store format that averages 11,000 square feet. Big 5’s product mix includes athletic shoes, apparel and accessories, as well as a broad selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, home recreation, tennis, golf, and winter and summer recreation.
Overview of Big 5 Sporting Goods (BGFV) 1st quarter 2021 earnings report
Big 5 Sporting Goods Fiscal 2021 First Quarter Highlights
- Achieves Record First Quarter Sales and Earnings Results
- Same Store Sales Increased 31.8% in FY 2021 First Quarter versus Guidance of 20%
- EPS of $0.96 for FY 2021 First Quarter versus Guidance Range of $0.47 to $0.53
- Ends FY 2021 First Quarter with $100.1 Million in Cash and Cash Equivalents, No Debt
- Increases Quarterly Cash Dividend by 20% to $0.18 per Share
- Declares Special Cash Dividend of $1.00 per Share
Big 5 Sporting Goods management commentary on their 1st quarter 2021 earnings
EL SEGUNDO, Calif., May 04, 2021 (GLOBE NEWSWIRE) -- Big 5 Sporting Goods Corporation (Nasdaq: BGFV) (the “Company,” “we,” “our,” “us,” “Big 5”), a leading sporting goods retailer, today reported financial results for the fiscal 2021 first quarter ended April 4, 2021.
Steven G. Miller, the Company’s Chairman, President and Chief Executive Officer, said, “We are pleased to report record first quarter results driven by a combination of top line sales strength, merchandise margin expansion and an improved cost structure. Our team continues to do a tremendous job satisfying the incredible consumer demand we are seeing across our diverse product mix.”
Mr. Miller continued, “Same store sales were up 31.8% for the fiscal 2021 first quarter reflecting broad-based strength across apparel, footwear and hardgoods, including very robust demand for winter-related products. These results were especially remarkable given the headwinds impacting sales of team sports products due to the widespread suspension of league play over most of the quarter. Our sales accelerated beyond expectations in March, benefitting from the resumption of team sports activities, along with school re-openings and stimulus checks. Our strong sales momentum has continued into the second quarter with sales performing at historically high levels for the quarter to date. We are excited by the strength in our business, which has translated to our balance sheet, as we continue to operate with zero debt while growing our cash position. In light of this strength and to continue to return value to shareholders, our Board of Directors has declared a 20% increase in our regular cash dividend to an annual rate of $0.72 per share and also has declared a special cash dividend of $1.00 per share.”
Steven G. Miller, the Company’s Chairman, President and Chief Executive Officer, said, “We are pleased to report record first quarter results driven by a combination of top line sales strength, merchandise margin expansion and an improved cost structure. Our team continues to do a tremendous job satisfying the incredible consumer demand we are seeing across our diverse product mix.”
Mr. Miller continued, “Same store sales were up 31.8% for the fiscal 2021 first quarter reflecting broad-based strength across apparel, footwear and hardgoods, including very robust demand for winter-related products. These results were especially remarkable given the headwinds impacting sales of team sports products due to the widespread suspension of league play over most of the quarter. Our sales accelerated beyond expectations in March, benefitting from the resumption of team sports activities, along with school re-openings and stimulus checks. Our strong sales momentum has continued into the second quarter with sales performing at historically high levels for the quarter to date. We are excited by the strength in our business, which has translated to our balance sheet, as we continue to operate with zero debt while growing our cash position. In light of this strength and to continue to return value to shareholders, our Board of Directors has declared a 20% increase in our regular cash dividend to an annual rate of $0.72 per share and also has declared a special cash dividend of $1.00 per share.”
Balance Sheet
The Company ended the fiscal 2021 first quarter with no borrowings under its credit facility and with cash and cash equivalents of $100.1 million. This compares to zero borrowings and $64.7 million of cash and cash equivalents as of the end of the 2020 fiscal year and to $124.3 million of borrowings and $44.2 million of cash as of the end of the fiscal 2020 first quarter, reflecting a $180.2 million improvement in net cash (cash less revolver borrowings) on a year-over-year basis and a $35.4 million improvement in net cash compared to the end of fiscal 2020. Total merchandise inventories decreased by approximately 20.8% as of the end of the fiscal 2021 first quarter versus the first quarter of the prior year.
Quarterly Cash Dividend and Special Cash Dividend
In light of the continued strength of the Company’s business, cash flow generation and improved balance sheet, the Company’s Board of Directors has declared a 20% increase in its quarterly cash dividend from $0.15 per share of outstanding common stock to $0.18 per share of outstanding common stock, which will be paid on June 15, 2021 to stockholders of record as of June 1, 2021. Additionally, to further return value to shareholders, the Company’s Board of Directors has declared a special cash dividend of $1.00 per share of outstanding common stock, which will be paid on June 1, 2021 to stockholders of record as of May 17, 2021.
Second Quarter Guidance
For the fiscal 2021 second quarter, the Company expects same store sales to increase in the range of 22% to 27% and expects to realize earnings per diluted share in the range of $1.05 to $1.25. Fiscal 2021 second quarter guidance reflects the combined positive impact of calendar shifts of the Easter holiday, during which the Company’s stores are closed, from the second quarter of fiscal 2020 into the first quarter of fiscal 2021, and the Fourth of July holiday from the third quarter of fiscal 2020 into the second quarter of fiscal 2021. The Company’s second quarter guidance compares to a same store sales decrease of 4.2% and earnings per diluted share of $0.52 in the second quarter of fiscal 2020, which included a net benefit of approximately $0.13 per diluted share related to rent abatement savings and a recovery in eminent domain litigation, partially offset by expense associated with special employee recognition bonus awards.
Store Openings
The Company currently has 430 stores in operation. During fiscal 2021, the Company expects to open approximately five stores and close approximately two stores.
The Company ended the fiscal 2021 first quarter with no borrowings under its credit facility and with cash and cash equivalents of $100.1 million. This compares to zero borrowings and $64.7 million of cash and cash equivalents as of the end of the 2020 fiscal year and to $124.3 million of borrowings and $44.2 million of cash as of the end of the fiscal 2020 first quarter, reflecting a $180.2 million improvement in net cash (cash less revolver borrowings) on a year-over-year basis and a $35.4 million improvement in net cash compared to the end of fiscal 2020. Total merchandise inventories decreased by approximately 20.8% as of the end of the fiscal 2021 first quarter versus the first quarter of the prior year.
Quarterly Cash Dividend and Special Cash Dividend
In light of the continued strength of the Company’s business, cash flow generation and improved balance sheet, the Company’s Board of Directors has declared a 20% increase in its quarterly cash dividend from $0.15 per share of outstanding common stock to $0.18 per share of outstanding common stock, which will be paid on June 15, 2021 to stockholders of record as of June 1, 2021. Additionally, to further return value to shareholders, the Company’s Board of Directors has declared a special cash dividend of $1.00 per share of outstanding common stock, which will be paid on June 1, 2021 to stockholders of record as of May 17, 2021.
Second Quarter Guidance
For the fiscal 2021 second quarter, the Company expects same store sales to increase in the range of 22% to 27% and expects to realize earnings per diluted share in the range of $1.05 to $1.25. Fiscal 2021 second quarter guidance reflects the combined positive impact of calendar shifts of the Easter holiday, during which the Company’s stores are closed, from the second quarter of fiscal 2020 into the first quarter of fiscal 2021, and the Fourth of July holiday from the third quarter of fiscal 2020 into the second quarter of fiscal 2021. The Company’s second quarter guidance compares to a same store sales decrease of 4.2% and earnings per diluted share of $0.52 in the second quarter of fiscal 2020, which included a net benefit of approximately $0.13 per diluted share related to rent abatement savings and a recovery in eminent domain litigation, partially offset by expense associated with special employee recognition bonus awards.
Store Openings
The Company currently has 430 stores in operation. During fiscal 2021, the Company expects to open approximately five stores and close approximately two stores.
Big 5 Sporting Goods (BGFV) stock price chart over the last 5 years
The image below shows the stock price history of Big 5 Sporting Goods over the last 5 years. And its been a very good time for Big 5 Sporting Goods stockholders. Over the last 5 years the stock of Big 5 Sporting Goods increased by a strong 127.6%
The stock of Big 5 Sporting Goods is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is an indication that the short term sentiment and momentum of Big 5 Sporting Goods stock is positive at this point in time.
The stock of Big 5 Sporting Goods is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is an indication that the short term sentiment and momentum of Big 5 Sporting Goods stock is positive at this point in time.
Big 5 Sporting Goods (BGFV) stock valuation
So what do we value Big 5 Sporting Goods stock at after the release of their 1st quarter 2021 earnings and the fiscal guidance provided for the full fiscal 2021? Based on Big 5 Sporting Goods earnings report our valuation models provides a target price (full value price) for Big 5 Sporting Goods at $23.10 a stock. We therefore believe that the stock of Big 5 Sporting Goods is undervalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $23.10 therefore we believe a good entry point into Big 5 Sporting Goods stock is at $20.80 or below. We expect the stock of Big 5 Sporting Goods to kick up from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is undervalued at this point in time.
We therefore rate Big 5 Sporting Goods as a buy
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $23.10 therefore we believe a good entry point into Big 5 Sporting Goods stock is at $20.80 or below. We expect the stock of Big 5 Sporting Goods to kick up from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is undervalued at this point in time.
We therefore rate Big 5 Sporting Goods as a buy
Next earnings release of Big 5 Sporting Goods
It is expected that Big 5 Sporting Goods will publish their 2nd quarter 2021 earnings report in early August 2021