Earnings growth of 1.7% over 3 years hasn't been enough to translate into positive returns for Ollie's Bargain Outlet Holdings (NASDAQ:OLLI) shareholders

The truth is that if you invest for long enough, you're going to end up with some losing stocks. But long term Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) shareholders have had a particularly rough ride in the last three year. So they might be feeling emotional about the 55% share price collapse, in that time. The more recent news is of little comfort, with the share price down 47% in a year. Even worse, it's down 13% in about a month, which isn't fun at all. But this could be related to poor market conditions -- stocks are down 12% in the same time.

Since Ollie's Bargain Outlet Holdings has shed US$272m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Ollie's Bargain Outlet Holdings

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the unfortunate three years of share price decline, Ollie's Bargain Outlet Holdings actually saw its earnings per share (EPS) improve by 5.2% per year. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Alternatively, growth expectations may have been unreasonable in the past.

It's worth taking a look at other metrics, because the EPS growth doesn't seem to match with the falling share price.

Revenue is actually up 14% over the three years, so the share price drop doesn't seem to hinge on revenue, either. This analysis is just perfunctory, but it might be worth researching Ollie's Bargain Outlet Holdings more closely, as sometimes stocks fall unfairly. This could present an opportunity.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

Ollie's Bargain Outlet Holdings is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think Ollie's Bargain Outlet Holdings will earn in the future (free analyst consensus estimates)

A Different Perspective

While the broader market lost about 9.8% in the twelve months, Ollie's Bargain Outlet Holdings shareholders did even worse, losing 47%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. On the bright side, long term shareholders have made money, with a gain of 3% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Ollie's Bargain Outlet Holdings better, we need to consider many other factors. For example, we've discovered 1 warning sign for Ollie's Bargain Outlet Holdings that you should be aware of before investing here.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.