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What: Shares of retailer Big Lots (NYSE:BIG) surged on Friday after the company reported its second-quarter results, beating analyst estimates and raising its full-year guidance. At noon Friday, the stock was up about 14%.

So what: Big Lots reported quarterly revenue of $1.21 billion, up 1.2% year-over-year and slightly higher than the average analyst estimate. Comparable-store sales growth came in at 2.8%, at the high-end of the company's prior guidance, with a lower store count compared to last year weighing on sales.

EPS, excluding a one-time charge, was $0.40, up 29% year-over-year and $0.06 higher than analysts were expecting. Gross margin was flat year-over-year, but a decline in operating expenses as a percentage of revenue allowed Big Lots to boost its operating margin to 2.5% during the quarter, up from 2.3% during the second quarter of 2014.

Going forward, Big Lots expects comparable-store sales to grow by 2%-3% during the third quarter, and by 1%-2% during the fourth quarter. For the full year, the company expects low-single-digit comparable-store sales growth, as well as adjusted net income between $2.90 and $3.00 per share, representing a 20% year-over-year increase at the midpoint of that range.

Now what: Big Lots had a solid quarter, but the jump in the stock price seems a bit overdone. A major component of Big Lot's EPS growth during the quarter was an 8% year-over-year decline in the diluted share count, driven by share buybacks. While there's nothing wrong with this, adjusted net income grew at a much slower rate than EPS.

Regardless, investors like what they see. After years of revenue and earnings declines, it appears that Big Lots is making progress turning its business around, and investors are betting on continued earnings growth going forward.

Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Big Lots. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.