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Why Wall Street Is Bullish on Ollie’s Bargain Outlet in 2019

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Why the bullish stance?

Most Wall Street analysts have retained their “buy” ratings for Ollie’s Bargain Outlet Holdings (OLLI) stock, given the strong financial performance in 2018. An increasing store base, expanding product assortment, and compelling deals are expected to drive the top-line growth for Ollie’s Bargain Outlet. For fiscal 2018, Ollie’s has forecast sales at $1.226 billion–$1.231 billion versus the $1.222 billion–$1.227 billion range guided earlier

About 57% of the 14 analysts covering OLLI have rated the stock a “buy” while 43% have rated it a “hold.” In the past 15 days, we’ve seen one price change for the stock. On December 18, J.P. Morgan cut its target price to $87.00 from $93.00.

Currently, analysts’ mean 12-month average target price for OLLI stock is $93.21, which reflects a 42.7% upside to its price on December 27.

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Ratings for peers

Of the 18 analysts covering Five Below (FIVE) stock, 72% have rated the stock a “buy” while 28% have given it a “hold” rating. In the past 15 days, we’ve seen no price changes for the stock. Analysts’ 12-month average target price for FIVE stock is $127.65, which reflects a 29.6% upside to its price on December 27.

About 62.0% of the 26 analysts covering Dollar Tree (DLTR) stock have a “buy” rating. The remaining analysts rated it as a “hold.” The mean target price for DLTR stock is $95.13, which reflects an 8.9% upside.

Of the 28 analysts covering Dollar General (DG) stock, 61.0% provided a “buy” rating. Another 36.0% rated it a “hold.” On December 18, J.P. Morgan lowered its target price for DG from $123.00 to $117.00. On December 13, Morgan Stanley upped its price target to $119.00 from $115.00. Analysts’ target price is $116.25, indicating a 9.2% potential upside.

Forward PE valuation

On December 27, Ollie’s Bargain was trading at a 12-month forward PE ratio of 31.8x. Five Below, Dollar General, and Dollar Tree are trading at 12-month forward PE ratios of 31.9x, 16.2x, and 15.1x, respectively.

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