Big 5 Sporting Goods Corp. (BGFV Nasdaq) is a holding company. Through its subsidiaries, the company is a sporting goods retailer. The company’s products include athletic shoes, apparel and accessories, as well as outdoor and athletic equipment. [BGFV’s] EPS increased from $0.49 to an estimated $0.93 over the past five quarters, indicating an improving growth rate. Analyst forecasts have recently been raised. The company recently reported better than expected results.[This] earnings strength is very positive. This indicates an improvement in future earnings growth may occur. ... Relative Valuation is positive. Big 5’s operating earnings yield of 6% ranks above 66% of the other companies in the Ford universe of stocks, indicating that it is undervalued. ... Price Movement is very positive. Big 5’s stock price is up 99.1% in the last 12 months, up 19.2% in the past quarter and up 0.1% in the past month. This historical performance should lead to above-average price performance in the next one to three months. ... We project that Big 5 will strongly outperform the market over the next 6 to 12 months. This projection is based on our analysis of three key factors that influence common stock performance: earnings strength, relative valuation, and recent price movement. Strong Buy.
Richard Segarra, CFA, Ford Equity Research, www.fordequity.com, 800-842-0207, 3/28/13
