Why Big Lots (BIG) Stock Is Gaining After-Hours Wednesday

NEW YORK (TheStreet) -- Big Lots (BIG) was gaining 2.7% to $46.04 after-hours Wednesday after announcing it will begin quarterly paying dividends.

The retailer's first dividend of 17 cents a share is payable on July 29 to all shareholders of record as of the close of business on July 11.

In a press release announcing the dividend Big Lots affirmed its second quarter guidance of 24 cents to 30 cents a share with comparable store sales growth of 1% to 3%.

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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, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BIG's revenue growth has slightly outpaced the industry average of 7.5%. Since the same quarter one year prior, revenues slightly increased by 1.1%. 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.
  • Net operating cash flow has significantly increased by 69.75% to $102.17 million when compared to the same quarter last year. In addition, BIG LOTS INC has also vastly surpassed the industry average cash flow growth rate of -79.52%.
  • BIG's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.11 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 89.6% when compared to the same quarter one year ago, falling from $32.33 million to $3.35 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Multiline Retail industry and the overall market, BIG LOTS INC's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: BIG Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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