On Thursday, Citi reiterated its Sell rating on Ollie's Bargain Outlet (NASDAQ:OLLI) with a consistent price target of $64.00. The firm anticipates that Ollie's will surpass second-quarter expectations, projecting comparable store sales (comps) to increase by 3% against a consensus of 2%, and earnings per share (EPS) to reach $0.83, compared to the consensus estimate of $0.78.
The forecast is based on the firm's foot traffic data, which has shown to be a reliable indicator of Ollie's performance. The data revealed that second-quarter foot traffic grew by 16.9%, a notable acceleration from the 11.0% increase in the first quarter. Additionally, third-quarter-to-date traffic is reported to be up by 11.7%.
Despite these positive indicators and the expectation of a strong second quarter, Citi does not see significant upside potential for Ollie's stock. The firm's analysis suggests that market expectations are already aligned with or exceed their estimates.
Furthermore, Ollie's is described as a "crowded long," with a crowding score of 0.80, which is significantly higher than the sector median of 0.49. This suggests that many investors may already hold optimistic positions in the stock, leading to a balanced to unfavorable risk/reward scenario as the company approaches its earnings announcement.
In other recent news, Ollie's Bargain Outlet has announced a partnership with Sunbit to launch a Visa (NYSE:V) co-branded credit card, aiming to enhance customer rewards and benefits. This initiative integrates with Ollie's Army loyalty program and is expected to bolster Ollie's brand presence and customer loyalty. Furthermore, Ollie's reported a 49% surge in adjusted earnings per share and an 11% rise in net sales, leading to several analyst upgrades.
Truist Securities raised Ollie's price target to $109, Loop Capital to $110, and JPMorgan (NYSE:JPM) shifted its rating from Neutral to Overweight. These firms anticipate a robust growth rate of 2% for Ollie's. Also, the company has announced plans to open 50 new stores throughout the fiscal year and has acquired eleven 99 Cents Only Stores in Texas.
InvestingPro Insights
As Ollie's Bargain Outlet (NASDAQ:OLLI) approaches its earnings announcement, insights from InvestingPro suggest a mixed financial landscape. Ollie's has demonstrated resilience with a strong return over the last three months, boasting a 34.15% price total return. This performance is underscored by a robust 14.52% revenue growth in the last twelve months as of Q1 2025, along with a healthy gross profit margin of 40.1%. These figures reflect a company that is effectively managing its operations and capitalizing on market opportunities.
InvestingPro Tips indicate that Ollie's is trading at a low P/E ratio relative to near-term earnings growth, with a P/E ratio of 30.75 and a PEG ratio of 0.48, suggesting that the stock may be undervalued considering its growth potential. Additionally, the company's liquid assets exceed short-term obligations, indicating strong liquidity and financial health. However, it is also trading at a high earnings multiple, which could be a point of consideration for investors looking at the value aspect.
For investors seeking a more comprehensive analysis, there are additional InvestingPro Tips available on the platform, which could provide a deeper dive into Ollie's financial health and future prospects. It's worth noting, analysts predict the company will be profitable this year, a sentiment that aligns with the positive revenue and profit margins reported. Ollie's does not pay a dividend to shareholders, which may be relevant for those focused on income-generating investments.
With a market cap of $6.07 billion and a price hovering near its 52-week high at 94.41% of the peak, Ollie's presents an interesting case for investors. The InvestingPro platform lists several more tips that could guide investment decisions regarding OLLI stock. As the next earnings date on August 29th approaches, stakeholders will be watching closely to see if the company's performance aligns with the optimistic metrics highlighted here.
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