Please ensure Javascript is enabled for purposes of website accessibility

Why Big Lots Stock Rose 20% in August

By Demitri Kalogeropoulos – Updated Sep 7, 2020 at 1:51PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Record sales growth powered a sharp spike in the shares last month.

What happened

The stock of Big Lots (BIG -4.29%) outpaced a booming market in August, jumping 20% compared with the S&P 500's 7% increase, according to data provided by S&P Global Market Intelligence.

That uptick pushed shares well ahead of the market in 2020. After bottoming at a loss of more than 50% March, the stock is now up 60% for the year.

A couple shopping for furniture.

Image source: Getty Images.

So what

That dramatic swing was supported by a blockbuster earnings report in late August. The retailer said that sales jumped a record 31% and adjusted earnings soared. Consumers spent freely at its stores as the COVID-19 pandemic spurred more spending on home furnishings and as federal stimulus payments hit people's bank accounts. "I am delighted by our record-breaking results," CEO Bruce Thorn said to investors on Aug. 28.

Now what

Big Lots deserves credit for executing well despite historic strain on its supply chain. Investors are also right to reward the company for its rising market share. But major questions around economic growth, continued virus outbreaks, and swinging consumer spending priorities make it unusually hard to estimate where the business goes from here.

As a result, investors shouldn't count on growth speeding up much beyond the roughly 1% annual rate that Big Lots had posted in the four years preceding the pandemic's strike.

Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Big Lots, Inc. Stock Quote
Big Lots, Inc.
$15.61 (-4.29%) $0.70

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.