Is Now The Time To Look At Buying Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ:OLLI)?

While Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the NASDAQGM. 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. 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.

View our latest analysis for Ollie’s Bargain Outlet Holdings

What’s The Opportunity In Ollie’s Bargain Outlet Holdings?

According to my price multiple model, which makes a comparison between the company’s price-to-earnings ratio and the industry average, the stock price seems to be justfied. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 35.01x is currently trading slightly above its industry peers’ ratio of 33.49x, which means if you buy Ollie’s Bargain Outlet Holdings today, you’d be paying a relatively reasonable price for it. And if you believe Ollie’s Bargain Outlet Holdings should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Furthermore, it seems like Ollie’s Bargain Outlet Holdings’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Ollie’s Bargain Outlet Holdings look like?

earnings-and-revenue-growth

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 74%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

Story continues

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 around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at OLLI? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on OLLI, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for OLLI, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it’s worth noting the risks involved. At Simply Wall St, we found 1 warning sign for Ollie’s Bargain Outlet Holdings and we think they deserve your attention.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Join A Paid User Research SessionYou’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here