Can Big Lots' (BIG) Latest ASR Program Help Stock Revive?
Zacks Investment Research | Jun 06, 2018 04:18AM ET
Big Lots, Inc. (NYSE:BIG) , which recently disappointed with dismal first-quarter fiscal 2018 results, seems to be making efforts to regain investors’ confidence. To this end, the company unveiled an accelerated share repurchase (“ASR”) contract, which sent its shares up by 1.1% during yesterday’s after-market trading session.
Per the agreement, Big Lots will buy back common shares worth roughly $100 million from Goldman Sachs (NYSE:GS) in a privately negotiated ASR transaction. While Big Lots will pay the purchase price of $100 million to Goldman Sachs by June 7, 2018, the latter will make an initial delivery of nearly 2.0 million shares to Big Lots. The total number of shares repurchased by Big Lots under the ASR deal will depend on the “Repurchase Price.”
The transaction, which will be funded by Big Lots through cash in hand along with available borrowings, is anticipated to conclude during the second quarter of fiscal 2018. Further, the completion of this buyback program will mark the end of Big Lots’ 2018 Share Repurchase Program that was authorized on Mar 7, 2018. Well, the ASR program speaks of Big Lots’ solid free cash flow and balance sheet status alongside reflecting its commitment to shareholders.
In fact, the company’s healthy financial status has helped it make shareholder-friendly moves like dividend payments and share buybacks for quite some time now. Evidently, the company returned $195 million and $288 million to shareholders in the form of share repurchase and dividends in fiscal 2017 and fiscal 2016, respectively. In fiscal 2015, Big Lots returned $239 million to shareholders under its share repurchase program.
Apart from Big Lots, retailers like Dollar General (NYSE:DG) , Ross Stores (NASDAQ:ROST) and Dillard’s (NYSE:DDS) among others are also known for their robust shareholder-friendly moves.
Coming back to Big Lots, although the news offered some respite to investors, it may take some time for this Zacks Rank #5 (Strong Sell) stock to revive from the darkness caused by its first-quarter fiscal 2018 show. Incidentally, Big Lots’ earnings missed the Zacks Consensus Estimate after nine straight quarters of beat. Further, it lagged sales estimates for the third straight quarter. Moreover, comparable store sales and margins remained soft, while the guidance for fiscal 2018 was also discouraging.
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Consequently, Big Lots lost 3.3% since the drab outcome, while it plunged close to 27% in the past three months, against the Zacks Investment Research
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