What's Behind Ollie's Bargain (OLLI) Bullish Run on Bourses?
Shares of Ollie's Bargain Outlet Holdings, Inc. OLLI have surged roughly 50.6% in the past six months. This Zacks Rank #2 (Buy) stock has not only fared better than the industry that increased a meager 2.3% but also the Zacks Consumer Staples sector that fell 4.1%. Notably, shares of this Harrisburg, PA-based company are hovering near its 52-week high of $94.70, and there is no doubt why Ollie's Bargain cannot breach that mark in the near term.
The company’s 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, reinforce its position.
Cumulatively, these have positioned the stock to augment both top and bottom-line performance in the long run. 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. Management now envisions fiscal 2018 net sales in the band of $1.222-$1.227 billion and adjusted earnings in the range of $1.73-$1.76 per share.
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.
Notably, 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 second quarter of fiscal 2018, comparable-store sales improved 4.4%, marking the 17th straight quarter of growth. The company now anticipates fiscal 2018 comparable-store sales growth of 2.5-3%.
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 and sustained a decent year-over-year improvement. In the trailing four quarters, the company has outperformed the Zacks Consensus Estimate for earnings by an average of 9%. We noted that net sales grew 13.1% to $288.1 million, while earnings per share surged 48.1% to 40 cents in the second quarter of fiscal 2018.
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Urban Outfitters URBN delivered an average positive earnings surprise of 17.7% in the trailing four quarters. It has a long-term earnings growth rate of 12% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Target TGT delivered an average positive earnings surprise of 1.3% in the trailing four quarters. It carries a Zacks Rank #2.
Burlington Stores BURL delivered an average positive earnings surprise of 11.4% in the trailing four quarters. It has a long-term earnings growth rate of 20.2% and a Zacks Rank #2.
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Ollie's Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report
Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report
Target Corporation (TGT) : Free Stock Analysis Report
Burlington Stores, Inc. (BURL) : Free Stock Analysis Report
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