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Category: Stock Market and Big Lots (BIG)
Date: 30 August 2020 Stock Price of Big Lots: $49.96 We take a look at the 2nd quarter earnings report of their 2020 fiscal year of Big Lots!, a retailer operating over 1400 retail stores in 47 states. The group reported a 32.9% increase in sales for the quarter compared to the same quarter of the previous year and they reported net income of $451.9 million for the quarter.
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Bruce Thorn, President and CEO of Big Lots - I am delighted with our record-breaking results in Q2. Our comp increase was the best in the company's history, and adjusted EPS was the most we've reported in a second quarter, and more than five times what we reported a year ago"
About Big Lots!
Headquartered in Columbus, Ohio, Big Lots, Inc. is a community retailer operating more than 1,400 Big Lots stores in 47 states, dedicated to friendly service, trustworthy value, and affordable solutions in every season and category – furniture, food, décor, and more. Our stock is traded on the New York Stock Exchange under the symbol BIG.
We exist to serve everyone like family, providing a better shopping experience for our customers, valuing and developing our associates, and creating growth for our shareholders. Big Lots supports the communities it serves through the Big Lots Foundation, a charitable organization focused on four areas of need: hunger, housing, healthcare, and education
We exist to serve everyone like family, providing a better shopping experience for our customers, valuing and developing our associates, and creating growth for our shareholders. Big Lots supports the communities it serves through the Big Lots Foundation, a charitable organization focused on four areas of need: hunger, housing, healthcare, and education
Overview of Big Lots' 2nd quarter 2020 earnings report
The data refers to the latest quarter unless specified otherwise:
- Net sales $1.644 billion
- Operating profit: $608.6 million
- Net income: $451.972 million
- Diluted earnings per share: $11.29
- PE ratio: 7
- Diluted number of shares outstanding: 40.040 million
- Cash dividend declared per common share: $0.30
- Dividend yield of Big Lots!: 2.4%
- Cash and cash equivalents: $898.60 million
- Cash and cash equivalents per share: $22.44
- Cash and cash equivalents on the group's balance sheet makes up 44.9% of the group's market capital
- Cash and cash equivalents makes up 21.5% of Big Lots! total assets
- Inventories: $713.504 million
- Inventories makes up 17.1% of Big Lots! total assets
- Net cash provided by operating activities for 6 months of fiscal year: $322.363 million
- Net cash provided by operating activities per share for 6 months of fiscal year: $8.05
- Shareholders' equity in Big Lots!: $1.328 billion
- Shareholders' equity per share: $32.87
- So Big Lots is trading at 1.51 times its stockholders equity per share which is outside the expected range of between 2 and 4 times that most firms tend to trade at. For some perspective the average price to book value of firms in the S&P 500 is 3.7 times.
Big Lots management commentary on their 2nd quarter 2020 earnings
COLUMBUS, Ohio, Aug. 28, 2020 /PRNewswire/ -- Big Lots, Inc. (NYSE: BIG) today reported net income of $452.0 million, or $11.29 per diluted share, for the second quarter of fiscal 2020 ended August 1, 2020. This result includes a one-time, after-tax benefit of $341.9 million, or $8.54 per diluted share, associated with the distribution centers sold as part of the previously announced sale/leaseback transactions that closed during the quarter. Excluding this benefit, adjusted net income was $110.1 million, or $2.75 per diluted share (see non-GAAP table included later in this release), which compares to the company's guidance for the second quarter, as provided on June 26, 2020, of $2.50 to $2.75 per diluted share (non-GAAP). Adjusted net income includes approximately $10 million of additional store, distribution center, and corporate bonus expense that was not contemplated in the company's June 26 guidance. Adjusted net income for the second quarter of fiscal 2019 was $20.6 million, or $0.53 per diluted share (non-GAAP).
Commenting on today's announcement, Bruce Thorn, President and CEO of Big Lots stated, "I am delighted with our record-breaking results in Q2. Our comp increase was the best in the company's history, and adjusted EPS was the most we've reported in a second quarter, and more than five times what we reported a year ago. Comp sales were driven by strong results both in-store, where traffic and basket were each up double digits, and on-line, which drove almost five comp points, and where we acquired more new customers than in any prior quarter.
Commenting on today's announcement, Bruce Thorn, President and CEO of Big Lots stated, "I am delighted with our record-breaking results in Q2. Our comp increase was the best in the company's history, and adjusted EPS was the most we've reported in a second quarter, and more than five times what we reported a year ago. Comp sales were driven by strong results both in-store, where traffic and basket were each up double digits, and on-line, which drove almost five comp points, and where we acquired more new customers than in any prior quarter.
I continue to be very proud of how our team has responded to the challenges over the past six months. The results in Q2 were made possible by exceptional teamwork across the entire organization, and I want to thank our associates in our stores, the distribution centers, and our corporate headquarters for their dedication, compassion and tireless efforts. Throughout, we have maintained our commitment to serving our customers and our communities in as safe and healthy environment as possible."
Mr. Thorn continued, "Looking forward, the third quarter is off to a strong start and I am confident that our Operation North Star strategies will continue to drive top line growth, increase customer engagement, and deliver tremendous leverage in our business. With our assortment of everyday essentials and stay-at-home products, we are well positioned for what appears to be a new normal. Our balanced offering of thoughtfully curated merchandise, neverouts, and closeouts, differentiates us from the competition and continues to surprise and delight our customers with tremendous value. Our operating results under Operation North Star, along with our commitment to disciplined capital management, position us to continue driving significant shareholder value."
Mr. Thorn continued, "Looking forward, the third quarter is off to a strong start and I am confident that our Operation North Star strategies will continue to drive top line growth, increase customer engagement, and deliver tremendous leverage in our business. With our assortment of everyday essentials and stay-at-home products, we are well positioned for what appears to be a new normal. Our balanced offering of thoughtfully curated merchandise, neverouts, and closeouts, differentiates us from the competition and continues to surprise and delight our customers with tremendous value. Our operating results under Operation North Star, along with our commitment to disciplined capital management, position us to continue driving significant shareholder value."
Big Lots (NYSE: BIG) stock price history over the last 5 years
The image below, obtained from Google, shows the stock price history of Big lots! (BIG) over the last 5 years. And its been a slightly positive time for BIG stockholders. 5 years ago the stock was trading around $46 and its currently trading at $49.96. That's a very modest return of 4.8% provided to BIG stockholders over the last 5 years.
The stock of Big Lots! (BIG) is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of BIG stock is very positive at this point in time.
The stock of Big Lots! (BIG) is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of BIG stock is very positive at this point in time.
Big Lots! (BIG) stock vs Dollar General (DG) stock over the last 5 years
The image below shows the stock price history of Big Lots! (BIG) and Dollar General (DG) over the last 5 years. And while they are both active in the retail space in the USA, the stock price trends and returns of these two firms are very different. The summary below shows the stock price returns of the two retailers over the last 5 years:
The stock of Dollar General has easily outperformed that of Big Lots over the last 5 years.
- Dollar General (DG): 177%
- Big Lots: 4.8%
The stock of Dollar General has easily outperformed that of Big Lots over the last 5 years.
Big Lots! (NYSE: BIG) latest stock valuation
Based on Big Lots! (BIG) latest earnings report what do we value their stock at? Based on the earnings report our valuation models provide a target price for Big Lots! (BIG) at $57.50 a stock. We therefore believe the stock of Big Lots (BIG) is undervalued at its current price.
We usually recommend that long term and fundamental investors look to enter a stock at least 10% below our target price, which in this case is $57.50. A good entry point into Big Lots (BIG) would therefore be at $51.70 or below.
Since the stock of Big Lots is trading at below our target price and suggested entry price we rate the stock of Big Lots! as a buy
We usually recommend that long term and fundamental investors look to enter a stock at least 10% below our target price, which in this case is $57.50. A good entry point into Big Lots (BIG) would therefore be at $51.70 or below.
Since the stock of Big Lots is trading at below our target price and suggested entry price we rate the stock of Big Lots! as a buy
Next earnings release of Big Lots! (BIG)
It is expected that Big Lots! (BIG) will release their 3rd quarter 2020 earnings report in late November 2020