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How Ollie's Bargain (OLLI) Looks Just Ahead of Q2 Earnings

Zacks Equity Research
·4 min read

Ollie's Bargain Outlet Holdings, Inc. OLLI is likely to register an increase in the top line when it reports second-quarter fiscal 2020 numbers on Aug 27, after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $515.9 million, indicating an improvement of 54.5% from the prior-year quarter.

Further, the bottom line of this retailer of brand name merchandise is expected to improve year over year. We note that the Zacks Consensus Estimate for earnings for the quarter under review has increased by a penny to 87 cents over the past 30 days. The figure suggests sharp growth from 35 cents reported in the year-ago period.

Notably, the company has a trailing four-quarter earnings surprise of 4.7%, on average. In the last reported quarter, this Harrisburg, PA-based company surpassed the Zacks Consensus Estimate by a significant margin.

Key Factors to Note

Ollie's Bargain business operating model of “buying cheap and selling cheap”, cost-containment efforts, focus on store productivity and expansion of customer reward program — Ollie's Army are likely to have contributed to the company’s second-quarter results. We believe that the company’s endeavors might have aided it in capitalizing on growing consumer demand for essentials and other daily purchases amid the ongoing pandemic.

Last month management issued outlook for the second quarter. The company guided net sales of approximately $515 million for the quarter ended Aug 1. This indicates a sharp increase of 54.2% from the prior-year period’s figure of $333.9 million. Also, the projected figure showcases a sequential increase of 47.4%.

Additionally, Ollie's Bargain projected comparable-store sales growth of roughly 40% for the to-be-reported quarter. This suggests a far better performance compared with the year-ago quarter, when the metric decreased 1.7%. We also note that in first-quarter fiscal 2020, comparable-store sales had declined 3.3%. The company had forecast gross margin of approximately 39% and operating margin of about 16% for the second quarter.

However, we cannot ignore concerns related to deleverage in supply-chain cost, promotional pressure and higher expenses associated with operating through coronavirus pandemic.

Ollies Bargain Outlet Holdings, Inc. Price, Consensus and EPS Surprise

Ollies Bargain Outlet Holdings, Inc. Price, Consensus and EPS Surprise
Ollies Bargain Outlet Holdings, Inc. Price, Consensus and EPS Surprise

Ollies Bargain Outlet Holdings, Inc. price-consensus-eps-surprise-chart | Ollies Bargain Outlet Holdings, Inc. Quote

What Does the Zacks Model Unveil?

Our proven model predicts an earnings beat for Ollie's Bargain this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. 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 +8.67%.

3 More Stocks With Favorable Combination

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

Big Lots BIG presently has an Earnings ESP of +10.57% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General DG has an Earnings ESP of +9.64% and a Zacks Rank #2, at present.

Hain Celestial HAIN has an Earnings ESP of +2.94% and a Zacks Rank #3 at present.

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Ollies Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report
 
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