Analysts Mixed On Ollie's Bargain Outlet After Q4 Earnings

Ollie's Bargain Outlet Holdings Inc OLLI reported mixed fourth-quarter results and management's EPS guidance for the full year ahead fell mostly short of expectations.

The Analysts

KeyBanc Capital Markets' Bradley Thomas maintains an Overweight rating on Ollie's with an unchanged $108 price target.

Buckingham Research Group's Bob Summers maintains at Neutral, unchanged $84 price target.

KeyBanc: Growth Story Unchanged

Ollie's earnings report was strong and extends its streak of positive comps to 19 quarters, Thomas said in a research report. During the quarter the company saw an increase in average basket and transaction although a snow storm during its biggest weekend impacted sales.

Nevertheless, Thomas said the company continues to take advantage of volatile trends among retailers and manufacturers which makes it an attractive investment in the retail segment.

As of the end of the fourth quarter, the total store count was 303, which implies "significant runway" to as much as 950 stores. As the company expands its footprint it should be able to show 1-2 percent comps, flat if not slightly higher margins and 17-20 percent annual earnings growth.

Buckingham: Valuation Concerns

Ollie's earnings report came in strong and management's 2019 guidance looks conservative, Summers said in a research report. Comparable store sales of 5.4 percent were impressive, but fell short of expectations of 6 percent. The stock is "overly sensitive" to comp performance so a negative reaction in the stock price can be expected.

Expectations were high heading into the print, so the report fell short of serving as a catalyst to "reignite" the stock's momentum.

Price Action

Ollie's Bargain Outlet were trading higher by 1.7 percent at $82.93 per share Wednesday afternoon.

Photo credit: Michael Rivera (Own work), via Wikimedia Commons