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Big Lots (BIG) Rallies on Stronger Expectations

Mar 01 2010

Big Lots (BIG) Rallies on Stronger Expectations

Big Lot Inc, the closeout retailer, has rallied recently on strong expectations for current and future quarter earnings. The company has beat earnings expectations four quarters in a row while earning 27 cents a share at the end of their 3rd quarter compared to expectations of 18 cents. The company is ready to announce their 4th quarter earnings for 2009 on Wednesday with estimates at $1.28 a share. This is a 28% improvement over the same quarter a year ago.

Next quarter is also looking well with analysts recently improving expectations to 53 cents a share from 47 cents a share 3 months ago. The companies forward looking Price/Earnings is at 13.07 after a nice 2.24% rise today. Revenue growth is moving higher each quarter on a year-over-year basis near 5% each period.

Options action for BIG Call options has been strong over the last two weeks. There has been 5 times more Call action for Big stock options compare to interest in Put options. The March 35 Calls are particularly popular which is slightly above the current trading price of $34.24 a share. You could purchase the stock going into earnings and place a trailing stop in case the earnings aren’t as strong as expected. Waiting until after the earnings would be a safe trade if the company increases their expectations for future quarters.

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