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Will Ollie's Bargain (OLLI) Earnings Continue to Rise in Q4?

Zacks Equity Research

Ollie's Bargain Outlet Holdings, Inc. OLLI is slated to report fourth-quarter fiscal 2018 results on Mar 26. In the trailing four quarters, this value retailer has recorded a positive earnings surprise of 7.3%. In the last reported quarter, the company’s bottom line outperformed the Zacks Consensus Estimate by 3.2%.

Let’s delve deeper and take a look at the factors that are likely to influence the results of the to-be-reported quarter.

How Are Estimates Shaping Up?

After registering a bottom-line increase of roughly 45.5% in the third quarter, Ollie's Bargain is likely to record year-over-year growth of about 37.3% in the fourth quarter. The Zacks Consensus Estimate for the quarter under review is pegged at 70 cents compared with 51 cents reported in the year-ago quarter. We note that the Zacks Consensus Estimate has been stable in the last 30 days. The Zacks Consensus Estimate for revenues is pegged at $398.1 million, up approximately 11.6% from the year-ago quarter.

For fiscal 2018, the consensus estimates for top and bottom lines are pegged at $1.25 billion and $1.81, respectively.

Factors Holding Key

Ollie's Bargain’s business model of “buying cheap and selling cheap”, cost-containment efforts, focus on store productivity, sturdy comparable-store sales performance and expansion of customer reward program, Ollie's Army, fortify its position. Cumulatively, these have positioned the stock to augment both top and bottom-line performance.

The company reported sturdy holiday sales numbers, which in turn led management to raise fiscal 2018 outlook. The company witnessed a stellar holiday season, backed by strength in toy and houseware categories. Comparable-store sales for the nine-week period ending Jan 5, 2019 grew 7.1% year over year. Moreover, net sales for the reported holiday season increased 16.6% year over year.

Management expects fiscal 2018 net sales to be nearly $1.245 billion, up from the previous view of $1.226-$1.231 billion. Further, the company anticipates roughly 4.4% rise in comparable-store sales, highlighting an increase from the earlier projection of 3-3.5%. Adjusted earnings are projected to be $1.81 per share for the said time period compared with $1.74-$1.77 guided earlier.

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. Moreover, the company sells merchandise at prices up to 70% lower than the department and fancy stores, and up to 20-50% lower than mass-market retailers.

Analysts pointed that stiff competition, rise in supply chain costs and any deleverage in SG&A expenses remain matters of concern.

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. Quote

Model Predicts Higher Probability of Earnings Beat

Our proven model shows that Ollie's Bargain is likely to beat estimates this quarter. A stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Ollie's Bargain has a Zacks Rank #2 and an Earnings ESP of +1.34%. This makes us reasonably confident of an earnings beat.

Stocks Poised to Beat Earnings Estimates

Here are some other companies you may consider as our model shows that these too have the right combination of elements to post earnings beat.

Darden Restaurants DRI has an Earnings ESP of +1.07% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

PVH Corp. PVH has an Earnings ESP of +1.14% and a Zacks Rank #3.

G-III Apparel GIII has an Earnings ESP of +0.92% and a Zacks Rank #3.

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