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Ollie's Bargain Outlet Overcomes A Sluggish Start To Deliver A Solid Quarter

OLLI - Ollie's Bargain Outlet Overcomes A Sluggish Start To Deliver A Solid Quarter

Ollie's Bargain Outlet Holdings Inc OLLI 8.93% posted another solid beat despite a sluggish start to the quarter and difficult year-over-year comparisons, leading RBC Capital to maintain its Outperform rating and raise estimates along with the price target.

Ollie's second-quarter comps of 3.5 percent topped RBC's 1.0 percent estimate, net sales grew 16 percent to $211 million versus RBC's $209 million estimate and adjusted EPS rose 38 percent to $0.21, $0.03 above RBC estimate. GMs also expanded by 120 bps to 39.7 percent, well ahead of RBC's 38.6 percent forecast.

The results of Ollie's Bargin benefited from improved deal flow, better customer values and higher comp growth as the company increased both scale and size.

"Although we still expect comps to slow modestly in 2H from recent trends, we remain buyers of OLLI due to the company's strong deal flow and tremendous unit growth potential," analyst Scot Ciccarelli wrote in a note.

Ollie's raised its 2016 comp forecast to 2.5–3.0 percent from 1.5–2.5 percent, while maintaining its relatively conservative long-term comp guidance of 1–2 percent.

Ciccarelli raised his FY16 EPS forecast by $0.03 to $0.90, which is the top end of management's new guidance of $0.88–$0.90, given strong quarterly results. The analyst also upped his FY17 EPS view to $1.02 from $1.00.

The analyst also hiked his price target to $32 from $30, while the stock is currently up 8.77 percent to $27.65 on the day.

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DateFirmActionFromTo
Sep 2016JefferiesMaintainsBuy
Apr 2016JefferiesMaintainsBuy
Apr 2016JP MorganMaintainsOverweight

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