Why Big 5 Sporting Goods' Shares Jumped

Is this meaningful or just another movement?

Travis Hoium
Travis Hoium
Feb 27, 2013 at 5:05PM
Consumer Goods

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of sports retailer Big 5 Sporting Goods (NASDAQ:BGFV) jumped as much as 12% in early trading before falling to a 4% gain today.

So what: The company reported fourth-quarter earnings that beat estimates on both the top and bottom lines. Revenue rose 7.4% to $243.6 million, ahead of the $226.7 million Wall Street expected. Earnings per share of $0.19 were a penny ahead of estimates.  

Now what: The best news is that same-store sales grew 6.5%, a sign of a healthy retailer. The company also raised its dividend to $0.10 per share quarterly. I think shares can move higher on the strong revenue growth and dividend jump. Shares are trading at 15 times forward earnings, a reasonable price given the company's growth.

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