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Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) defied analyst predictions to release its quarterly results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 2.1% to hit US$414m. Ollie's Bargain Outlet Holdings reported statutory earnings per share (EPS) US$0.68, which was a notable 16% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the 13 analysts covering Ollie's Bargain Outlet Holdings are now predicting revenues of US$1.89b in 2022. If met, this would reflect a meaningful 9.9% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to drop 20% to US$2.85 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.93b and earnings per share (EPS) of US$2.99 in 2022. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.
The consensus price target fell 8.5% to US$100, with the weaker earnings outlook clearly leading valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Ollie's Bargain Outlet Holdings, with the most bullish analyst valuing it at US$120 and the most bearish at US$70.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Ollie's Bargain Outlet Holdings' revenue growth will slow down substantially, with revenues next year expected to grow 9.9%, compared to a historical growth rate of 16% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.4% next year. So it's pretty clear that, while Ollie's Bargain Outlet Holdings' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Ollie's Bargain Outlet Holdings. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Ollie's Bargain Outlet Holdings' future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Ollie's Bargain Outlet Holdings analysts - going out to 2023, and you can see them free on our platform here.
You still need to take note of risks, for example - Ollie's Bargain Outlet Holdings has 3 warning signs (and 1 which can't be ignored) we think you should know about.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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