Critical Survey: Ollie’s Bargain Outlet (OLLI) vs. Five Below (FIVE)

Ollie’s Bargain Outlet (NASDAQ: OLLI) and Five Below (NASDAQ:FIVE) are both mid-cap consumer staples companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, profitability, analyst recommendations, institutional ownership, earnings, valuation and risk.

Profitability

This table compares Ollie’s Bargain Outlet and Five Below’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ollie’s Bargain Outlet 12.36% 12.06% 8.81%
Five Below 8.64% 26.59% 16.99%

Risk and Volatility

Ollie’s Bargain Outlet has a beta of 0.19, meaning that its share price is 81% less volatile than the S&P 500. Comparatively, Five Below has a beta of 0.53, meaning that its share price is 47% less volatile than the S&P 500.

Earnings & Valuation

This table compares Ollie’s Bargain Outlet and Five Below’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ollie’s Bargain Outlet $1.08 billion 4.35 $127.59 million $1.25 60.16
Five Below $1.28 billion 4.40 $102.45 million $1.79 56.43

Ollie’s Bargain Outlet has higher earnings, but lower revenue than Five Below. Five Below is trading at a lower price-to-earnings ratio than Ollie’s Bargain Outlet, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

90.0% of Ollie’s Bargain Outlet shares are held by institutional investors. 20.3% of Ollie’s Bargain Outlet shares are held by insiders. Comparatively, 2.6% of Five Below shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Ollie’s Bargain Outlet and Five Below, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ollie’s Bargain Outlet 1 6 8 0 2.47
Five Below 0 5 12 0 2.71

Ollie’s Bargain Outlet presently has a consensus target price of $70.27, indicating a potential downside of 6.56%. Five Below has a consensus target price of $95.00, indicating a potential downside of 5.95%. Given Five Below’s stronger consensus rating and higher probable upside, analysts plainly believe Five Below is more favorable than Ollie’s Bargain Outlet.

Summary

Five Below beats Ollie’s Bargain Outlet on 9 of the 14 factors compared between the two stocks.

About Ollie’s Bargain Outlet

Ollie's Bargain Outlet Holdings, Inc. operates as a retailer of brand name merchandise. The company offers food products, housewares, books and stationery, bed and bath products, floor coverings, electronics, and toys; and other products, including hardware, personal health care, candy, clothing, sporting, pet and lawn, and garden products. It provides its products primarily under the Ollie's, Ollie's Bargain Outlet, Good Stuff Cheap, Ollie's Army, Real Brands Real Cheap!, Real Brands! Real Bargains, Sarasota Breeze, Steelton Tools, American Way, and Commonwealth Classics names. As of June 5, 2018, the company operated 277 store locations in 21 states across the Eastern portion of the United States. The company was formerly known as Bargain Holdings, Inc. and changed its name to Ollie's Bargain Outlet Holdings, Inc. in March 2015. Ollie's Bargain Outlet Holdings, Inc. was founded in 1982 and is headquartered in Harrisburg, Pennsylvania.

About Five Below

Five Below, Inc. operates as a specialty value retailer in the United States. It offers accessories, including novelty socks, sunglasses, jewelry, scarves, gloves, hair accessories, athletic tops and bottoms, and T-shirts, as well as beauty products comprising nail polish, lip gloss, fragrance, and branded cosmetics; and items used to complete and personalize living space, including glitter lamps, posters, frames, fleece blankets, plush items, pillows, candles, incense, lighting, novelty décor, and related items, as well as provides storage options for the customers room. The company also provides sport balls; team sports merchandise and fitness accessories, such as hand weights, jump ropes, and gym balls; games, including name brand board games, puzzles, collectibles, and toys; and pool, beach and outdoor toys, games, and accessories. In addition, it offers accessories, such as cases, chargers, headphones, and other related items for cell phones, tablet, audio, and computers; books, video games, and DVDs; craft activity kits; arts and crafts supplies that consist of crayons, markers, and stickers; and trend-right items for school comprising backpacks, fashion notebooks and journals, novelty pens and pencils, locker accessories, and everyday name brand items. Further, the company provides party goods, decorations, gag gifts, and greeting cards, as well as every day and special occasion merchandise products; assortment of classic and novelty candy bars, movie-size box candy, seasonal-related candy, and gum and snack food; chilled drinks through coolers; and seasonally-specific items used to celebrate and decorate for events. It primarily serves teen and pre-teen customers. As of February 3, 2018, it operated 625 stores in 32 states. The company was formerly known as Cheap Holdings, Inc. and changed its name to Five Below, Inc. in August 2002. Five Below, Inc. was founded in 2002 and is headquartered in Philadelphia, Pennsylvania.

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