PreMarket Prep Stock Of The Day: Big Lots

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

Retail earnings continued today, with Big Lots BIG announcing first-quarter results. The report and corresponding price action were discussed in detail on today’s PreMarket Prep Show.

Initial Reaction To Q1 Report

Before the open, Big Lots announced an EPS beat of 34 cents and a sales beat of $143 million versus the same quarter last year. Year-over-year comps were up 10%.

That instigated a sharply higher opening in pre-market trading ($43.15 versus Thursday’s close of $36.68). In a matter of minutes, it spiked to $44.02 and reversed course. That marked the highest level for the issue since December 2018 at $44.81.

Price Action During Broadcast

When the issue was being discussed on the show, it had backed off the high and was trading just under $42. Co-host Dennis Dick did not mince words regarding his opinion on the price action. He said was report was "good, but not that great."

"I do not own this stock in any of my portfolios, but if I did I would be hitting the 'sell' button very hard," Dick said.

The full discussion of the issue can be found here:

Price Action Off The Open

The issue managed to hang on to a majority of its gain heading into the opening bell. After its open at $42.25, it rallied only another 8 cents to $42.33 and sharply reversed course.

In fact, a step-down seller(s) came in with size and punished the issue. Not only did it erase all of the pre-market gains, but it also breached Thursday’s low ($35.91) falling to $35.64. Since reaching that low, it has rebounded into the $37 handle at the time of writing.

It should be noted that 6.2 million shares have already traded compared to the 20-day average of 1.55 million

Moving Forward

The technical damage inflicted on the issue is similar to what happened to Walmart WMT after its earnings beat, and could be difficult to overcome.

Keep in mind there are a lot of investors sitting on some major gains in the issue. From its March 13 low to its session high ($42.33) represents a 318% increase. With the major catalyst already out, it's likely any rallies the issue will find willing sellers after its remarkable two-month rally.

Photo credit: Mike Kalasnik via Wikimedia Commons