Ollie's Bargain Outlet Upgraded To Outperform At Credit Suisse

Ollie's Bargain Outlet Holdings Inc. was upgraded to outperform from neutral at Credit Suisse. The firm cites Ollie's second-quarter same-store sales results, up 7.8% for its first quarter as a public company, which beat the estimate consensus of 4.5%. Credit Suisse expects same-store sales to weaken over the remainder of the year because of the inherent volatility of closeout businesses. The market is aware of this volatility and management is "cautious" for this time period, the firm's analysts said. "Ollie's stores generate cash-on-cash returns of more than 50% and new stores average a payback period of under 2 years," Credit Suisse wrote in a note, which places the company just below Dollar General Corp. and Sprouts Farmers Market Inc. in store-level returns among the firm's "staples retail universe." Ollie's is in 16 states, so there's room for growth as well. The company, which went public in July at a $16 IPO price, is down 6% over the past month. The S&P is down 2% for the same time.

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