Retailer Big 5 Sporting Goods (NASDAQ:BGFV) will be sporting its Q4 2006 financial results on Thursday, March 8.

What analysts say:

  • Buy, sell, or waffle? Some 17 analysts are tracking Big 5. While seven say buy, 10 of them think it would be better to hold.
  • Revenues. No surprise here. With the sporting-goods retailer preannouncing sales of $234.5 million, analysts fell in line with their estimates, although original forecasts had pegged sales at $236 million.
  • Earnings. Profit estimates of $0.38 per share have held steady for the past few months.

What management says:
Operating primarily in the West and Northwest, Big 5 Sporting Goods has carved a niche for itself, selling name-brand and private-label products at competitive prices. The sporting-goods sector is highly competitive: Not only does Big 5 face off against sporting-goods superstores like Dick's Sporting Goods (NYSE:DKS) and Sports Chalet (NASDAQ:SPCHB), but also specialty retailers like Gander Mountain (NASDAQ:GMTN), ProBass Shops, and Cabela's (NYSE:CAB), along with mass-merchandise retailers such as Wal-Mart (NYSE:WMT) and Sears Holdings' (NYSE:SHLD) Kmart.

Big 5 Chairman, CEO, and President Steven Miller noted, "Apparel was our strongest performing category for the quarter, benefiting from a number of factors, including favorable winter weather comparisons in many of our markets." Same-store sales were also up 4.2%, helping to drive numbers -- but not quite as high as the analysts had expected.

What management does:
In earlier quarters, gross margins felt pressure as costs rose. Big 5 was able to support operating margins by benefiting from co-op advertising cost reimbursements, but that will now affect fourth-quarter results. Now's also the time when the company hands out its bonuses, so expect to see the improvements witnessed here for much of the year to dissipate.

























All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Big 5 Sporting Goods continues to expand its store count, adding nine more stores in the quarter, with further expansions planned for 2007. While the new stores have been propelling further sales, the new distribution facilities built to handle the growth have squeezed profits because of higher labor and operating costs. The slight lessening in gasoline costs during the quarter may slightly boost results.

Although its P/E of 18 suggests it's trading at a discount to most of its competition, an enterprise value-to-free cash flow ratio of 48 suggests that the company's still richly valued.

Related Foolishness:

Big 5 Sporting Goods has earned a two-star rating from Motley Fool CAPS, the new investor intelligence community. You can add your voice to the new stock rating service by joining today. It's free!

Cabela's is a recommendation ofMotley Fool Hidden Gems. Wal-Mart is a recommendation ofMotley Fool Inside Value. Regardless of your investing style, The Motley Fool has a service for you.

Fool contributor Rich Duprey owns shares of Wal-Mart but does not own any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.