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Will Higher Revenues Lift Ollie's Bargain (OLLI) Q3 Earnings?

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Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) is slated to report third-quarter fiscal 2018 results on Dec 4. In the trailing four quarters, this value retailer has recorded a positive earnings surprise of 9%. In the last reported quarter, the company delivered a positive earnings surprise of 8.1%.

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 Shaping Up?

After registering a bottom-line increase of roughly 48% in the second quarter, Ollie's Bargain is likely to record year-over-year growth of about 41% in the third quarter. The Zacks Consensus Estimate for the quarter under review is pegged at 31 cents compared with 22 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 $280.6 million, up approximately 18% from the year-ago quarter.

Factors Holding Key

Ollie's Bargain’s business model of “buying cheap and selling cheap”, cost-containment efforts, focus on store productivity, sturdy comparable-store sales performance and expansion of customer reward program, Ollie's Army, fortify its position. Cumulatively, these have positioned the stock to augment both top and bottom-line performance.

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 second quarter of fiscal 2018, comparable-store sales improved 4.4%, marking the 17th 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. Moreover, the company sells merchandise at prices up to 70% lower than the department and fancy stores, and up to 20-50% lower than mass-market retailers.

Analysts pointed that stiff competition, rise in supply chain costs and any deleverage in SG&A expenses remain matters of concern.

What the Zacks Model Unveils?

Our proven model does not conclusively show 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 #2 but an Earnings ESP of 0.00%. This makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

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

Boot Barn Holdings (BOOT - Free Report) has an Earnings ESP of +6.85% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zumiez (ZUMZ - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank #3.

Dollar General (DG - Free Report) has an Earnings ESP of +1.59% and a Zacks Rank #3.

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