RECOMMENDATION
We rate BIG 5 SPORTING GOODS CORP (BGFV) 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 solid stock price performance, compelling growth in net income and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.
HIGHLIGHTS
This stock has managed to rise its share value by 236.12% over the past twelve months. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
BIG 5 SPORTING GOODS CORP has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, BIG 5 SPORTING GOODS CORP turned its bottom line around by earning $0.40 versus -$0.16 in the prior year.
Regardless of the drop in revenue, the company managed to outperform against the subsector average of 11.0%. Since the same quarter one year prior, revenues slightly dropped by 5.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
The gross profit margin for BIG 5 SPORTING GOODS CORP is currently lower than what is desirable, coming in at 33.66%. Regardless of BGFV's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.88% trails the subsector average.
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