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Ollie's Bargain's Decent Comps, Business Model to Fuel Growth

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Ollie's Bargain's Decent Comps, Business Model to Fuel Growth

Ollie's Bargain (OLLI) has an impressive streak of beating quarterly earnings and revenue estimates.

Ollie's Bargain Outlet Holdings, Inc.’s OLLI business model of “buying cheap and selling cheap”, cost-containment efforts, focus on store productivity, sturdy comparable-store sales (comps) performance and expansion of customer reward program, Ollie's Army, fortify its position. Notably, shares of this Zacks Rank #2 (Buy) stock have surged 30.5% in the past six months against the industry’s decline of 8.2%.

The company’s comparable-store sales performance has exhibited a decent run. Comparable-store sales have increased 6%, 3.2% and 3.3% in fiscal 2015, 2016 and 2017, respectively. During the first quarter of fiscal 2018, comparable-store sales improved 1.9%, marking the 16th straight quarter of growth. Increase in comparable-store sales was driven by a 300 basis points increase in average basket. Ollie's Bargain continues to anticipate comparable-store sales growth of 1-2% during fiscal 2018.



Notably, the company’s results are highly dependent on the availability of closeout merchandise at compelling prices, as the same represents roughly 70% of goods purchased. Further, the company has been making concerted efforts to lower its debt burden. Cumulatively, these have positioned the stock to augment both its top and bottom-line performance in the long run.

We note that Ollie's Bargain has an impressive streak of beating quarterly earnings and revenue estimates. The stock has surpassed the Zacks Consensus Estimate for both earnings and revenues in the trailing seven quarters. In the trailing four quarters, the company has outperformed the consensus mark by an average of 9%. Per management, net sales have increased at a CAGR of 18.8% from $540.7 million in fiscal 2013 to $1.077 billion in fiscal 2017, while net income has increased from $19.5 million to $127.6 million during the said period.

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Burlington Stores BURL delivered an average positive earnings surprise of 17.8% in the trailing four quarters. It has a long-term earnings growth rate of 18.1% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ross Stores ROST delivered an average positive earnings surprise of 6.4% in the trailing four quarters. It carries a Zacks Rank #2.

The TJX Companies TJX delivered an average positive earnings surprise of 4.8% in the trailing four quarters. It has a long-term earnings growth rate of 10.6% and a Zacks Rank #2.

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Ollie's Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report
 
Ross Stores, Inc. (ROST) : Free Stock Analysis Report
 
The TJX Companies, Inc. (TJX) : Free Stock Analysis Report
 
Burlington Stores, Inc. (BURL) : Free Stock Analysis Report
 
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