Actionable news
0
All posts from Actionable news
Actionable news in OLLI: OLLIE'S BARGAIN OUTLET HOLDINGS Inc COMMON STOCK,

A Beat And Raise Quarter For Ollie's Bargain Outlet

OLLI - A Beat And Raise Quarter For Ollie's Bargain Outlet

Jefferies maintains its Buy rating on Ollie's Bargain Outlet Holdings Inc OLLI 8.93% after another quarter showed comp sales and EPS ahead and above Street expectations.

The SSS increase of 3.5 percent came in ahead of Jefferies and the Street's expectations for +1.0 percent. The company continues to expand the vendor base and is seeing better buying opportunities, particularly in CPG categories including HBA, food, candy and pets.

"The quarter started slow in May due to unfavorable weather but then bounced back post Memorial Day and stayed strong through June and July," analyst Daniel Binder wrote in a note.

Related Link: Ollie's Bargain Outlet Sees FY17 Comps Increasing 2.5–3%

Further, gross margin increased 120 bps year-over-year, with merchandise margin up 30 bps. Also, labor costs are not expected to be a big headwind as management doesn't anticipate the need to move to a $10 starting wage.

"Momentum reflects a favorable buying environment, better access to deals and more direct relationships. Meanwhile, Ollie's Army is growing faster than expected and with deepening customer relationships. We expect shares to move higher as estimates get revised upward," Binder highlighted.

Binder also raised his price target to $31 from $30, based on shares selling at a PEG ratio of 1.5x (30 P/E) using his FY18 EPS estimate of $1.02.

"We believe a premium multiple is warranted given OLLI's appealing early stage growth stock attributes, including its mid-teen unit growth, strong new store economics, and growing loyalty base of Ollie's Army members," Binder added.

At time of writing, shares of Ollie's Bargain had climbed 9.28 percent on the day to trade at $27.78.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

DateFirmActionFromTo
Sep 2016JefferiesMaintainsBuy
Apr 2016JefferiesMaintainsBuy
Apr 2016JP MorganMaintainsOverweight

© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.