Stock (Symbol) |
Ollie’s Bargain Outlet (OLLI) |
Stock Price |
$42 |
Sector |
| Retail & Travel |
Data is as of |
| July 11, 2017 |
Expected to Report |
| Aug 29 |
Company Description |
|
Sharek’s Take |
 Ollie’s Bargain Outlet (OLLI) is beloved by investors. During the past year the stock soared from $25 to $42 and beat the street along the way. But I personally feel the stock is too high, as the P/E has jumped from around 25 a year ago to 36 now. I’m not that impressed with OLLI’s same store sales growth, which was just 2% in each of the last 2 qtrs. Good stocks have +5% SSS growth, great stocks have +10%. Ollie’s delivers a treasure-hunt shopping experience in offering closeout products bought at a discount and selling them for 20-70% off retail and still making a healthy 15% pre-tax profit. The company was founded in 1982 in Pennsylvania but didn’t go public until July 2015 at $16 a share. Since 2011 the company has gone from 100 stores to 234 and has a total opportunity of 950 in the US. New stores cost $1,000,000 to build, do $3,700,000 in sales the first year and deliver pre-tax profit (EBITA) of around $550,000. From 2011 to 2015 OLLI grew sales and profits 18% a year. The best thing about Ollie’s is the company has never lost money on a single store. That’s great. But as the P/E of 36 is double the Est. LTG of 18% per year, and I just feel that’s too high. OLLI is on my radar. |
One Year Chart |
 Last qtr OLLI had 25% profit growth on 18% sales growth — both were solid. SSS of 2% wasn’t. The company beat profit estimates of 15%, but 217 profit estimates only rose a penny from $1.16 to $1.17. Looking ahead, analysts expect 19%, 18%, 21% and 20% profit growth the next 4 qts. OLLI has beaten the street the last 4 qtrs so I feel 25% growth the next 4 qtrs is achievable. |
Fair Value |
 My Fair Value on this stock is a P/E of 30. That’s $35 a share. Stock seems too high now. Profits are expected to climb 21% this year and 16% next year, but again OLLI has been beating estimates so these may continue to climb higher. 2017 & 2018 profit estimates have increased from $1.04 to $1.17 and $1.23 to $1.36 the last 4 qtrs respectively. |
Bottom Line |
 Ollie’s Bargain Outlet provides good bargains to consumers, and that should keep it shielded from the threat of the Internet. I like the concept, especially the fact the company has never lost money on a single store. But I missed buying the stock earlier and now that its a lot higher I am cautious on the near term prospects of the stock. Also, note it looks extended on the ten-year chart. OLLI’s is on my radar for the Growth Portfolio, and I would like to buy in around $35. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
