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Can Ollie's Bargain (OLLI) Record Higher Earnings in Q1?

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Ollie's Bargain’s (OLLI - Free Report) business model of “buying cheap and selling cheap” and sturdy comparable-store sales performance are likely to fuel top-line growth in the first quarter of fiscal 2019.

Can Ollie's Bargain (OLLI - Free Report) Record Higher Earnings in Q1?

Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) is slated to report first-quarter fiscal 2019 results on Jun 6. This value retailer has a positive earnings surprise of 6.7% in the trailing four quarters. In the last reported quarter, the company’s bottom line outperformed the Zacks Consensus Estimate by 1.4%.

Ollie's Bargain Outlet Holdings, Inc. Price and EPS Surprise

Ollie's Bargain Outlet Holdings, Inc. Price and EPS Surprise

Ollie's Bargain Outlet Holdings, Inc. price-eps-surprise | Ollie's Bargain Outlet Holdings, Inc. Quote

Let’s delve deeper and analyze the factors that are likely to influence the upcoming quarterly results.

How Are Estimates Shaping Up?

After registering a bottom-line increase of roughly 39.2% in the final quarter of fiscal 2018, Ollie's Bargain is likely to record year-over-year growth of about 7.3% in the first quarter of fiscal 2019. The Zacks Consensus Estimate for the quarter under review is pegged at 44 cents compared with 41 cents reported in the year-ago quarter. We note that the Zacks Consensus Estimate has remained unchanged in the last 30 days. The Zacks Consensus Estimate for revenues is pegged at $318.9 million, indicating an improvement of approximately 15.7% from the year-ago quarter.

Factors Likely to Influence Q1

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 company to augment both top and bottom-line performance in the to-be-reported quarter.

Notably, the company has exhibited an impressive comparable-store sales performance in the past quarters. During the fourth quarter of fiscal 2018, comparable-store sales improved 5.4%, marking the 19th straight quarter of growth. Increase in comparable-store sales was driven by rise in average basket size and transactions. Continuation of the robust comps trend in the fiscal first quarter could drive revenues higher.

The company’s results are highly dependent on the availability of brand name and 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 concerns. SG&A expenses have been increasing for quite some time now. In the fourth quarter of fiscal 2018, it increased 7.8% on account of higher selling expenses on account of new store growth and increased sales volume at existing stores.

What the Model Predicts?

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 #3 but an Earnings ESP of -6.55%, which makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

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

General Mills (GIS - Free Report) has an Earnings ESP of +1.18% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dave & Buster's Entertainment (PLAY - Free Report) has an Earnings ESP of +4.46% and a Zacks Rank #3.

Constellation Brands (STZ - Free Report) has an Earnings ESP of +4.42% and a Zacks Rank #3.

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