"Down 32% over the past 3 months (to just 5.0x fwd EV/EBITDA), with short interest of 10% and just a 31% Buy recommendation ratio, we believe shares of BIG more than discount the execution risks associated with the new CEO's vision to make Big Lots a more relevant retailer," the research note states.
"While we acknowledge an increasingly competitive environment and headwinds faced by consumers, BIG has the lowest sales productivity in our universe."
The stock was rising 5.29% to $27.69 shortly after the market opened on Tuesday.
Separately, TheStreet Ratings team rates BIG LOTS INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate BIG LOTS INC (BIG) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BIG's revenue growth has slightly outpaced the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 1.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.08 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Multiline Retail industry. The net income has significantly decreased by 59.0% when compared to the same quarter one year ago, falling from -$5.99 million to -$9.52 million.
- Net operating cash flow has decreased to -$153.12 million or 22.83% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, BIG LOTS INC has marginally lower results.
- You can view the full analysis from the report here: BIG Ratings Report