Big Lots, Netflix: S&P Laggards
The S&P 500 rose 5.03 points, or 0.37%, Tuesday to close at 1372.
Shares of Big Lots fell 24.06% Tuesday to $34.71. The discount retailer updated its first-quarter retail sales guidance late Monday, citing weaker-than-anticipated U.S. sales.
Big Lots expects its U.S. comparable store sales to be "slightly negative compared to our prior guidance" on March 2, which was for an increase of between 2% and 4%.
Big Lots' shares currently trade at an estimated price-to-earnings ratio for next year of 8.87X; the average for broad-line retailers is 18.44X. For comparison, Wal-Mart(WMT) has a higher forward P/E of 10.9X.
Ten of the 17 analysts who cover Big Lots rate it at buy; seven analysts give the stock a hold rating.
TheStreet Ratings gives Big Lots an A- grade with a buy rating and $58.51 price target. The stock has fallen 8.08% year to date.
Netflix shares dropped 13.9% Tuesday to $87.68. After Monday's closing bell, the movie streaming company reported first-quarter earnings of $44 million, or 80 cents a share, up from year-earlier earnings of $38 million, or 70 cents a share. Concerns about subscriber growth in the company's streaming business drove Tuesday's selling.
"We think our 2012 domestic streaming net adds will be about the same as in 2010 (about 7 million), and that gross adds will approximately follow the 2010 seasonal pattern," Netflix said in its shareholder letter. The company added, "Due to this increased net add quarterly seasonality, Q2 net adds will be below those of 2010, despite Q2 gross adds following the traditional seasonal pattern, and despite us expecting to match 2010 in annual net additions."
Netflix shares trade at a forward P/E of 30.14X; the average for specialty retailers is 15.91X. For comparison, Best Buy(BBY) has a lower forward P/E of 5.76X.
Eighteen of the 35 analysts who cover Netflix rate it at hold. Nine analysts give the stock a sell rating and eight rate it at buy.
TheStreet Ratings gives Netflix a C+ grade and hold rating. The stock has risen 26.54% year to date.
--Written by Alexandra Zendrian in New York.
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