With a daily loss of -6.71% and a 3-month decline of -2.19%, Ollie's Bargain Outlet Holdings Inc (OLLI, Financial) presents a curious case for value investors. The company's Earnings Per Share (EPS) of 2.92 leads us to the pivotal question: Is Ollie's Bargain Outlet Holdings fairly valued at its current market price? To uncover this, we delve into a thorough valuation analysis that aims to provide clarity on OLLI's market standing. Read on as we explore the intrinsic worth of Ollie's Bargain Outlet Holdings in the following analysis.
Company Introduction
Ollie's Bargain Outlet Holdings Inc is a distinguished retailer known for offering brand-name merchandise at significantly reduced prices. With a business model that thrives on providing a treasure hunt shopping experience, Ollie's has carved a niche for itself in the retail sector. The company operates across the Eastern half of the United States, with a strategy that combines a compelling customer value proposition and a unique marketing approach. As we assess Ollie's Bargain Outlet Holdings' stock price of $74.23 against its Fair Value (GF Value) of $76.9, we aim to present a comprehensive evaluation of the company's true market value.
Summarize GF Value
The GF Value is a proprietary metric that indicates the intrinsic value of a stock, incorporating historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. It serves as a benchmark for the fair trading value of a stock. When the stock price veers significantly above the GF Value Line, it may be considered overvalued, potentially leading to subpar future returns. Conversely, a price well below the GF Value Line suggests the stock could be undervalued, with the prospect of higher future returns. With Ollie's Bargain Outlet Holdings (OLLI, Financial) currently priced at $74.23, our analysis suggests that the stock is fairly valued.
Given Ollie's Bargain Outlet Holdings' fair valuation, we can expect the long-term return of its stock to align closely with the company's business growth rate.
Financial Strength
Assessing a company's financial strength is crucial to avoid the high risk of permanent capital loss. Ollie's Bargain Outlet Holdings' cash-to-debt ratio of 0.72 places it above 59.35% of its peers in the Retail - Defensive industry. With a financial strength rating of 7 out of 10, Ollie's Bargain Outlet Holdings demonstrates a fair level of financial stability.
Profitability and Growth
Consistent profitability is a sign of a lower-risk investment. Ollie's Bargain Outlet Holdings has maintained profitability for the past decade. With an annual revenue of $2.10 billion and an Earnings Per Share (EPS) of $2.92, the company boasts an operating margin of 10.83%, outperforming 92.36% of its industry counterparts. The overall profitability rank of 9 out of 10 reflects Ollie's strong performance.
Growth is a vital factor in valuation, often correlating with long-term stock performance. Ollie's Bargain Outlet Holdings' 3-year average revenue growth rate surpasses 60.75% of the Retail - Defensive industry. However, its 3-year average EBITDA growth rate of -2.4% is lower than 77.78% of its industry peers, indicating an area for potential improvement.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) is another measure of profitability. If ROIC exceeds WACC, it indicates value creation for shareholders. Ollie's Bargain Outlet Holdings has demonstrated this with an ROIC of 10.07 compared to a WACC of 6.24 over the past 12 months.
Conclusion
In conclusion, Ollie's Bargain Outlet Holdings (OLLI, Financial) appears to be fairly valued at its current market price. The company exhibits fair financial health and robust profitability. Despite its growth ranking below a significant portion of the industry, its ability to create value is evident. For a deeper dive into Ollie's Bargain Outlet Holdings' financials, interested investors can explore the company's 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
