Stock (Symbol) |
Ollie’s Bargain Outlet (OLLI) |
Stock Price |
$45 |
Sector |
| Retail & Travel |
Data is as of |
| October 22, 2017 |
Expected to Report |
| Nov 29 |
Company Description |
|
Sharek’s Take |
 Ollie’s Bargain Outlet (OLLI) has gone on a tear during the last year — from $27 to $45 — but has simmered down lately. And with a P/E of 38, OLLI is a bit high to buy right now. Other than that, this is a great stock. Ollie’s delivers a treasure-hunt shopping experience in offering closeout products bought at a discount and then 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, then the profit growth rate accelerated after OLLI’s IPO and are currently growing at a high-twenty percent rate. OLLI stock has a ton of good things going for it. The company has never lost money on a single store. Ollie’s keeps beating the street and estimates always rise a little every qtr. The company Chairman, CEO and President Mark Butler says he’s never seen a better environment in his 35 years. With momentum this strong I see OLLI continuing to climb and will add the stock to the Growth Portfolio today. |
One Year Chart |
 Impressive results last qtr. 29% profit growth beat the 19% estimate. Sales rose 21% on 5% same store sales. 217 profit estimates ticked up from $1.17 to $1.19. 2018’s went from $1.36 to $1.43. Qtrly profit estimates are 24%, 18%, 24% and 22%. OLLI has beaten the street every qtr since its IPO and my guess is it will continue to grow profits 30% a qtr (on average) the next 4 qtrs. |
Fair Value |
 My Fair Value has been too low. I guess I didn’t fully accept this retailer could perform so well internally with the external pressures in retail. But headlines of 30% profit growth for the next year should keep this stock lofty. I am taking my Fair Value P/E from 30 to 35 this qtr, and that gives the stock a 2018 Fair Value of $50 a share. Now since estimates are on the rise, I feel the stock could be $55 next year, and with OLLI down to $44 today that’s 25% upside for next year (using pen and paper). |
Bottom Line |
 Ollie’s Bargain Outlet provides good bargains to consumers, and its business model continues to thrive regardless of competition from the Internet. The company Chairman, CEO and President says in his 35 years he’s never seen a better environment and business has never been stronger. Words like that are usually taken with a grain of salt, but I tend to agree as I expect profits to grow 30% during the next 12 months. That kind of growth will help OLLI’s keep its premium P/E multiple, and I envision 25% upside through 2018. Ollie’s will be added to the Growth Portfolio today. It doesn’t have enough value for the Aggressive Growth Portfolio and isn’t safe enough for the Conservative Stock Portfolio. |
Power Rankings |
Growth Stock Portfolio
26 of 35Aggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
