Breaking News
0

Should Ollie's Bargain Soft Q1 Comparable Sales Worry You?

By Zacks Investment ResearchStock MarketsJun 25, 2019 09:32PM ET
www.investing.com/analysis/should-ollies-bargain-soft-q1-comparable-sales-worry-you-200434907
Should Ollie's Bargain Soft Q1 Comparable Sales Worry You?
By Zacks Investment Research   |  Jun 25, 2019 09:32PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) came out with first-quarter fiscal 2019 results in early June, maintaining its positive earnings surprise streak. Net sales also surpassed the Zacks Consensus Estimate after missing the same in the preceding quarter. The company sustained its decent year-over-year improvement in both the top and bottom line, while reporting the 20th consecutive quarter of comparable-store sales growth.

However, we note that comparable-store sales — an important indicator of a retailer's health — decelerated sharply on a sequential basis. The metric rose 0.8% during the quarter under review, following an increase of 5.4% and 4.6% registered in the fourth and third quarters of fiscal 2018, respectively. Management informed that increase in average basket was partly offset by fall in transactions. Moreover, unfavorable weather conditions impacted the company’s seasonal business.

Nonetheless, analysts believe that this a short blip, and Ollie's Bargain looks comfortable in sustaining comparable-store sales growth momentum in the upcoming periods. Certainly, the company’s business model of “buying cheap and selling cheap,” cost-containment efforts, focus on store productivity and expansion of customer reward program strengthen its position.

Cumulatively, these have positioned the stock to augment both the top and bottom-line performance in the long run. The stock’s expected earnings per share growth rate of 22.1% for 3-5 years indicates the same. Taking a cue from the past we noticed that net sales have surged at a CAGR of 18.1% from $638 million in fiscal 2014 to $1.241 billion in fiscal 2018, while net income has soared from $26.9 million to $135 million during the aforementioned period.

Management now envisions fiscal 2019 net sales in the band of $1.440-$1.453 billion and adjusted earnings in the range of $2.13-$2.17 per share. This portrays a sharp improvement from net sales of $1,241.4 million and adjusted earnings of $1.83 per share recorded in fiscal 2018.

Wrapping Up

Given limited exposure to tariffs, strong closeout merchandise availability, store growth potential and tight expense management, the market has fairly rewarded the company. Notably, this Zacks Rank #3 (Hold) stock has surged roughly 32.5% in the past six months, outperforming the industry’s growth of 13.1%. But this has taken the valuation quite high.

The stock is currently trading at 37.49X forward 12-month earnings, which compares with 17.38X for the industry and 19.18X for the sector. Moreover, we remain concerned about any increase in supply chain costs and deleverage in SG&A expenses that may weigh upon margins. Management expects gross margin to contract 20-30 basis points during the second quarter of fiscal 2019 but expected to pick-up in the back half of the year.

3 More Hot Picks

Target (NYSE:TGT) has an average positive earnings surprise of 2.6% in the trailing four quarters. It carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zumiez (NASDAQ:ZUMZ) has a long-term earnings growth rate of 13.5% and a Zacks Rank #2.

Costco (NASDAQ:COST) has a long-term earnings growth rate of 8.9% and a Zacks Rank #2.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple (NASDAQ:AAPL) sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>



Ollie's Bargain Outlet Holdings, Inc. (OLLI): Free Stock Analysis Report

Zumiez Inc. (ZUMZ): Free Stock Analysis Report

Target Corporation (TGT): Free Stock Analysis Report

Costco Wholesale Corporation (COST): Free Stock Analysis Report

Original post
Should Ollie's Bargain Soft Q1 Comparable Sales Worry You?
 
Should Ollie's Bargain Soft Q1 Comparable Sales Worry You?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email