Stock Analysis

Is Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) Potentially Undervalued?

NasdaqGM:OLLI
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Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI), might not be a large cap stock, but it led the NASDAQGM gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Ollie's Bargain Outlet Holdings’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Ollie's Bargain Outlet Holdings

Is Ollie's Bargain Outlet Holdings Still Cheap?

Ollie's Bargain Outlet Holdings is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Ollie's Bargain Outlet Holdings’s ratio of 36.13x is above its peer average of 20.44x, which suggests the stock is trading at a higher price compared to the Multiline Retail industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Ollie's Bargain Outlet Holdings’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Ollie's Bargain Outlet Holdings generate?

earnings-and-revenue-growth
NasdaqGM:OLLI Earnings and Revenue Growth August 25th 2023

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Ollie's Bargain Outlet Holdings' earnings over the next few years are expected to increase by 52%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in OLLI’s positive outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe OLLI should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on OLLI for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for OLLI, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

It can be quite valuable to consider what analysts expect for Ollie's Bargain Outlet Holdings from their most recent forecasts. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in Ollie's Bargain Outlet Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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Find out whether Ollie's Bargain Outlet Holdings is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.