The Returns At Ollie's Bargain Outlet Holdings (NASDAQ:OLLI) Aren't Growing

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. So, when we ran our eye over Ollie's Bargain Outlet Holdings' (NASDAQ:OLLI) trend of ROCE, we liked what we saw.

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Return On Capital Employed (ROCE): What Is It?

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. The formula for this calculation on Ollie's Bargain Outlet Holdings is:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)

0.11 = US$250m ÷ (US$2.6b - US$304m) (Based on the trailing twelve months to February 2025).

Therefore, Ollie's Bargain Outlet Holdings has an ROCE of 11%. That's a relatively normal return on capital, and it's around the 13% generated by the Multiline Retail industry.

View our latest analysis for Ollie's Bargain Outlet Holdings

In the above chart we have measured Ollie's Bargain Outlet Holdings' prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Ollie's Bargain Outlet Holdings .

What Can We Tell From Ollie's Bargain Outlet Holdings' ROCE Trend?

While the returns on capital are good, they haven't moved much. Over the past five years, ROCE has remained relatively flat at around 11% and the business has deployed 59% more capital into its operations. 11% is a pretty standard return, and it provides some comfort knowing that Ollie's Bargain Outlet Holdings has consistently earned this amount. Over long periods of time, returns like these might not be too exciting, but with consistency they can pay off in terms of share price returns.

Our Take On Ollie's Bargain Outlet Holdings' ROCE

To sum it up, Ollie's Bargain Outlet Holdings has simply been reinvesting capital steadily, at those decent rates of return. And long term investors would be thrilled with the 107% return they've received over the last five years. So even though the stock might be more "expensive" than it was before, we think the strong fundamentals warrant this stock for further research.

Ollie's Bargain Outlet Holdings could be trading at an attractive price in other respects, so you might find our free intrinsic value estimation for OLLI on our platform quite valuable.

While Ollie's Bargain Outlet Holdings isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.