Investors are looking for big things from discount retail titan Big Lots (NYSE:BIG), as its earnings report is tomorrow. Already, investors have driven shares up over 9% in Wednesday afternoon trading with hopes that the earnings will justify the massive run-up today.
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The good news train for Big Lots started in an unlikely place: Dollar Tree (NASDAQ:DLTR). Dollar Tree put up its third quarter results, and it turned out the results were not as bad as some believed would be the case. With that bullet dodged, a new investment thesis was born: perhaps the discount retailers might be able to dodge the worst of an economy where consumers are increasingly tapped out. Plus, a look at past history shows that Dollar Tree and Big Lots have been frequently correlated when it comes to their earnings days. Thus, gains for one often mean gains for the other, though not always.
New Moves Ahead May Help Big Lots
To its credit, Big Lots isn’t just counting on its position as a discount retailer to win the day. It’s also making some moves that should help even more. For instance, it has declared every Friday to be “Black Friday,” starting this sale notion all the way back in October and running it clear through to December 22. That should have some results now as well as next quarter. Plus, it’s teamed up with Uber (NYSE:UBER) to allow its Uber Eats platform to deliver items to customers purchased at Big Lots. There’s even some special discounting for Uber One members.
Is Big Lots a Good Stock to Buy?
Turning to Wall Street, analysts have a Hold consensus rating on BIG stock based on three Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 74.55% loss in its share price over the past year, the average BIG price target of $5.50 per share implies 14.35% upside potential.
