Last Update29 Aug 25Fair value Increased 4.27%
Analysts raised their price target for Ollie’s Bargain Outlet to $140.07, citing accelerated store growth, strong comps, margin expansion, and incremental market share gains, though some warn that elevated valuation now largely reflects these tailwinds.
Analyst Commentary
- Accelerated store growth, strong comparable sales, and effective execution are supporting share gains and positive outlooks for unit expansion.
- Q2 performance exceeded expectations with strong gross margin and EBIT margin expansion, bolstered further by consumers increasingly seeking deep value.
- Incremental sales are being captured from competitor closures, with ongoing robust deal flow and favorable closeout inventory conditions.
- Analysts highlight the potential for sustained high same-store sales growth through the second half, supporting estimates of FY25 EPS rising toward $4.00-$4.30.
- Some bearish analysts caution that despite operational strengths, the stock's valuation is elevated and much of the upside from favorable industry dynamics is now reflected in the price.
What's in the News
- Raised fiscal 2025 guidance with expected net sales of $2.631–2.644 billion and operating income of $292–298 million, up from prior outlook.
- Celebrated grand opening of 600th store, expanding into New Hampshire, the 34th state; employs over 13,000 associates.
- Opened new store in Omaha, adding 50–60 jobs per location; company employs over 12,000 associates.
- Repurchased 159,757 shares for $17.02 million, completing buyback of 6,263,670 shares (9.86%) for $424.78 million under 2019 program.
- No shares were repurchased under the program announced in March 2025 as of the most recent update.
Valuation Changes
Summary of Valuation Changes for Ollie's Bargain Outlet Holdings
- The Consensus Analyst Price Target has risen slightly from $134.33 to $140.07.
- The Net Profit Margin for Ollie's Bargain Outlet Holdings has fallen slightly from 9.47% to 9.27%.
- The Future P/E for Ollie's Bargain Outlet Holdings remained effectively unchanged, moving only marginally from 33.19x to 33.71x.
Key Takeaways
- Acquiring store leases from Big Lots and repurposing assets boosts market share and profitability, supporting long-term growth.
- Efficient buying model and private label credit card drive revenue consistency, enhance customer loyalty, and strengthen competitive position.
- Operational challenges, cost pressures, and tariff uncertainties could strain Ollie's Bargain Outlet's near-term earnings and financial health, despite potential long-term benefits.
Catalysts
About Ollie's Bargain Outlet Holdings- Operates as a retailer of brand name merchandise in the United States.
- Ollie's acquisition of 40 additional store leases from Big Lots, which are located in existing trade areas and have below-market rents, could lead to increased profitability and expanded revenue due to boosted market share and customer base.
- The company's ability to capitalize on store closures and bankruptcies by acquiring abandoned assets is expected to fortify its competitive positioning, resulting in long-term revenue growth and improved net margins.
- The flexibility of Ollie's buying model allows it to navigate uncertainties in the closeout market effectively, ensuring a stable supply of merchandise and contributing to consistent revenue and stable margins.
- The accelerated store openings, with approximately 75 new locations planned, are anticipated to drive significant revenue growth, while the potential for market share gains from Big Lots closures could provide additional sales boosts.
- The launch of a private label credit card, which has shown an increase in basket sizes, could enhance revenue and customer loyalty, providing a forward-looking catalyst for earnings growth.
Ollie's Bargain Outlet Holdings Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Ollie's Bargain Outlet Holdings's revenue will grow by 12.4% annually over the next 3 years.
- Analysts assume that profit margins will increase from 8.6% today to 9.5% in 3 years time.
- Analysts expect earnings to reach $315.0 million (and earnings per share of $4.74) by about August 2028, up from $201.0 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 33.2x on those 2028 earnings, down from 39.8x today. This future PE is greater than the current PE for the US Multiline Retail industry at 19.7x.
- Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.45%, as per the Simply Wall St company report.
Ollie's Bargain Outlet Holdings Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The acquisition of Big Lots store leases involves significant pre-opening expenses and dead rent, which could pressure near-term earnings despite potential long-term benefits, affecting overall net margins.
- The reliance on Big Lots locations for accelerated growth may introduce operational challenges, reminiscent of past supply chain issues, posing risks to efficient revenue generation.
- Tariff disruptions and uncertainties in direct imports from China, comprising a significant portion of the business, could lead to increased costs and potential revenue impact if prices are not managed effectively.
- The pressure on big-ticket item sales, amid a consumer environment under financial strain, might hinder broader revenue growth and affect the sales mix, impacting overall earnings performance.
- Increased investments in store openings and new initiatives, like the private label credit card, could strain resources and elevate costs, possibly affecting net income and overall financial health if expected returns are delayed.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $134.333 for Ollie's Bargain Outlet Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $159.0, and the most bearish reporting a price target of just $105.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.3 billion, earnings will come to $315.0 million, and it would be trading on a PE ratio of 33.2x, assuming you use a discount rate of 8.5%.
- Given the current share price of $130.52, the analyst price target of $134.33 is 2.8% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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