Big Lots, Inc. (BIG) recently surprised on estimates for the third consecutive quarter even as it saw a slight decline in sales.

Big Lots is a closeout retailer which sells a broad range of products including seasonal items, furniture, housewares, toys, electronics, home decor and tools. It has been benefiting from customers seeking value in their purchases during the recession.

On Aug 25, the company reported that earnings per share were 35 cents which surprised on the Zacks Consensus Estimate by 12.90%, or 4 cents. It also surpassed the 32 cents reported in the second quarter of 2008.

Sales fell by 1.7% to $1.086 million from $1.105 million in the year ago quarter. Comparable store sales were also lower, decreasing 2.4% for the quarter.

Fiscal 2009 Guidance Raised

Given that the company continues to surprise on estimates, it also continues to raise its fiscal 2009 guidance range. Big Lots now expects earnings per share in the range of $1.92 to $2.02, up from its prior forecast of $1.85 to $1.95.

The company also expects third quarter earnings per share between 14 cents and 19 cents.

Zacks Consensus Estimates rose to be inline with the company’s guidance range. Third quarter Zacks Consensus Estimates climbed 1 penny to 17 cents in the last month.

The full-year Zacks Consensus Estimates gained 6 cents to $1.99 with 10 out of 12 analysts raising in the last 30 days.

Value Fundamentals

Big Lots is slightly more expensive than when I last reviewed it in June. It now trades with a forward P/E of 13.06 but was trading at 12.3 in June.

Big Lots is now a Zacks #2 Rank (buy) stock. It has a stellar 1-year return on equity (ROE) of 20.28% which beats the industry average of 15.56%.

Zacks Investment Research
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