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Ollie's Bargain (OLLI) Q2 Earnings: Will the Momentum Stay?

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Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) is slated to report second-quarter fiscal 2018 results on Sep 5. In the trailing four quarters, this value retailer has outperformed the Zacks Consensus Estimate by an average of 9%. In the last reported quarter, the company delivered a positive earnings surprise of 13.9%.

Let’s delve deeper and take a look at the factors that are likely to influence the results of the to-be-reported quarter.

How Are Estimates Faring?

After registering a bottom-line increase of roughly 64% in the first quarter, Ollie's Bargain is likely to record year-over-year growth of about 37% in the second quarter. The Zacks Consensus Estimate for the quarter under review is pegged at 37 cents compared with 27 cents reported in the year-ago quarter. We note that the Zacks Consensus Estimate has been stable in the last 30 days. The Zacks Consensus Estimate for revenues is pegged at $284.6 million, up approximately 12% from the year-ago quarter.

Which Factors Hold Key to Ollie's Bargain’s Performance?

Ollie's Bargain’s business model of “buying cheap and selling cheap”, cost-containment efforts, focus on store productivity, sturdy comparable-store sales (comps) performance and expansion of customer reward program, Ollie's Army, fortify its position.

The company’s comparable-store sales performance has exhibited a decent run. Comparable-store sales have increased 6%, 3.2% and 3.3% in fiscal 2015, 2016 and 2017, respectively. During the first quarter of fiscal 2018, comparable-store sales improved 1.9%, marking the 16th straight quarter of growth.

The company’s results are highly dependent on the availability of closeout merchandise at compelling prices, as the same represents roughly 70% of goods purchased. Further, the company has been making concerted efforts to lower debt burden. Cumulatively, these have positioned the stock to augment both its top and bottom-line performance in the long run.

However, stiff competition, rising supply chain costs and fall in transactions are the headwinds that may still concern investors.

What the Zacks Model Unveils?

Our proven model shows that Ollie's Bargain is likely to beat estimates this quarter. A stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Ollie's Bargain has a Zacks Rank #3 and an Earnings ESP of +2.74%. This makes us reasonably confident of an earnings beat.

Other Stocks Poised to Beat Earnings Estimates

Here are some other companies you may want to consider as our model shows that these too have the right combination of elements to post earnings beat.

Costco Wholesale Corporation (COST - Free Report) has an Earnings ESP of +0.49% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an Earnings ESP of +1.49% and a Zacks Rank #3.

NIKE, Inc. (NKE - Free Report) has an Earnings ESP of +3.56% and a Zacks Rank #3.

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