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Factors to Know Ahead of Ollie's Bargain's (OLLI) Q2 Earnings

Ollie's Bargain Outlet Holdings, Inc. OLLI is likely to register an increase in the top line when it reports second-quarter fiscal 2022 numbers on Sep 1 before market open. The Zacks Consensus Estimate for revenues is pegged at $457.5 million, indicating an increase of 10% from the prior-year quarter.

The bottom line of this extreme-value retailer of brand name merchandise is anticipated to have declined year over year. We note that the Zacks Consensus Estimate for second-quarter earnings per share has been stable at 33 cents over the past 30 days. The figure suggests a sharp decline of 36.5% from the year-ago period.

The company has a trailing four-quarter negative earnings surprise of 17.1%, on average. In the last reported quarter, this Harrisburg, PA-based company’s bottom line missed the Zacks Consensus Estimate by 33.3%.

Key Factors to Note

Ollie's Bargain’s business operating model of “buying cheap and selling cheap,” cost-containment efforts, focus on store productivity and an expansion of the customer reward program, Ollie's Army, are likely to have contributed to the second-quarter performance. It has been making efforts to create an alignment between value-driven merchandise and customer demand.

On its first-quarter earnings call, management highlighted that sales trends have improved substantially in the second quarter, driven by the higher demand for warm weather seasonal products, coupled with great deals and a healthy inventory position. The company projected second-quarter net sales in the bracket of $450-$460 million, up from the $415.9 million reported in the year-ago period. It guided flat to 3% growth in comparable store sales.

However, margins remain an area of concern due to increased supply-chain costs and higher labor costs. The company guided the second-quarter gross margin to be approximately 34.5%. This suggests a contraction from the gross margin of 39.2% reported in the year-ago period.

We note that SG&A expenses have been increasing for quite some time now. In the last reported quarter, SG&A expenses increased due to the increased number of stores and higher wage rates in select markets. A lower gross margin and deleverage in SG&A expenses might have hurt the operating income. The company projected the second-quarter operating income between $27 million and $30 million, down from the $45.7 million reported in the prior-year quarter.

The aforementioned factors are likely to get reflected in the company’s bottom line. Ollie's Bargain guided second-quarter adjusted earnings in the range of 32-35 cents a share, down from the adjusted earnings of 52 cents reported in the year-ago quarter.

Ollie's Bargain Outlet Holdings, Inc. Price, Consensus and EPS Surprise

Ollie's Bargain Outlet Holdings, Inc. Price, Consensus and EPS Surprise
Ollie's Bargain Outlet Holdings, Inc. Price, Consensus and EPS Surprise

Ollie's Bargain Outlet Holdings, Inc. price-consensus-eps-surprise-chart | Ollie's Bargain Outlet Holdings, Inc. Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Ollie's Bargain this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here.

Ollie's Bargain has a Zacks Rank #2 but an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

3 Stocks With the Favorable Combination

Here are three companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Casey's General Stores CASY currently has an Earnings ESP of +24.88% and a Zacks Rank #3. The company is expected to register a bottom-line increase when it reports first-quarter fiscal 2023 results. The Zacks Consensus Estimate for the quarterly earnings per share of $3.32 suggests an increase of 4.1% from the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Casey's General’s top line is anticipated to have risen year over year. The consensus mark for CASY’s revenues is pegged at $4.6 billion, indicating an increase of 44.4% from the figure reported in the year-ago quarter. Casey's General has a trailing four-quarter earnings surprise of 5.8%, on average.

Dave & Buster's Entertainment PLAY currently has an Earnings ESP of +2.97% and a Zacks Rank #3. The company is likely to register a decline in the bottom line when it reports second-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for the quarterly earnings per share of $1.01 suggests a decline of 5.6% from the year-ago quarter.

Dave & Buster's Entertainment’s top line is expected to have increased year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $432.3 million, which indicates an increase of 14.5% from the figure reported in the prior-year quarter. PLAY has a trailing four-quarter earnings surprise of 41.1%, on average.

Campbell Soup Company CPB currently has an Earnings ESP of +0.60% and a Zacks Rank #3. The company is expected to register an increase in the bottom line when it reports fourth-quarter fiscal 2022 results. The Zacks Consensus Estimate for the quarterly earnings per share of 56 cents suggests an increase of 1.8% from the year-ago quarter.

Campbell Soup’s top line is anticipated to have increased year over year. The consensus mark for CPB’s revenues is pegged at $1.98 billion, indicating an increase of 5.5% from the figure reported in the year-ago quarter.

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Campbell Soup Company (CPB) : Free Stock Analysis Report
 
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Ollie's Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report
 
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