Big Lots Case Analysis

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Big Lots, Inc. (BIG) Industry: General Merchandise Stores Rating Recommendation: HOLD 12-mo. Price target: $51.63 Most recent closing price: $45.65 * Dividend Yield: 1.55% * Investment Thesis: * BIG is in a retail transformation where the scope and value is not being recognized by the market * Their new management team is positioning BIG for success over the long-term * While sell-side analysts are hopeful about the stock, they are underestimating the extent to which BIG's transformation will necessitate multiple appreciation because the company will be more competitive in the discount arena. * BIG’s Earnings Rating increased from a 5 to a 7. The discount store average rating is a 4.7. * BIG has a Valuation rating of 4 while the S&P 500 COMPOSITE index has an avg. rating of 5. * On days when the market was up, BIG tends to perform in-line with the S&P 500 COMPOSITE index and on days that the market was down, the shares generally decrease by less than the S&P 500 COMPOSITE index * BIG’s Earnings Per Share from 2010 - 2015 on avg. was 2.63, with the high/low being 2.99 and 2.15. Company Big Lots, Inc. is a non-traditional discount retail store in the United States and was founded in 1967 by Sol A. Shenk. Operating with a total of 1,460 stores as of 2014, Big Lots, Inc. main objective is to reach out to customers by providing them with great savings on value-priced merchandise. Big Lots, Inc. has a wide variety of goods, which include packaged food and beverages, furniture, clothing, toys, houseware, and electronics. Most of BIG merchandise comes from production overruns, packaging changes, discontinued products, order cancellations, liquidations, returns, and other problems in the supply chain of different manufacturers. They obtain these products by a rating process that gauges quality, brand,

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