Stock Analysis

Should You Investigate Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) At US$54.27?

NasdaqGM:OLLI
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Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI), is not the largest company out there, but it saw a decent share price growth in the teens level on the NASDAQGM over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Ollie's Bargain Outlet Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

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

What Is Ollie's Bargain Outlet Holdings Worth?

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 35.77x is above its peer average of 17.93x, which suggests the stock is trading at a higher price compared to the Multiline Retail industry. In addition to this, it seems like Ollie's Bargain Outlet Holdings’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

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

earnings-and-revenue-growth
NasdaqGM:OLLI Earnings and Revenue Growth January 26th 2023

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. In the upcoming year, Ollie's Bargain Outlet Holdings' earnings are expected to increase by 47%, 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? OLLI’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to 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 an eye on OLLI for a while, 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 optimistic prospect is encouraging for OLLI, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Ollie's Bargain Outlet Holdings, you'd also look into what risks it is currently facing. For example - Ollie's Bargain Outlet Holdings has 1 warning sign we think you should be aware of.

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.