This Discount Retailer Just Fell to a 52-Week Low. Should You Buy the Dip?

President Trump extended the ceasefire with Iran indefinitely on Tuesday. As a result, the S&P 500 E-Mini futures (ESM26) were up more than half a percent in pre-market trading this morning, looking to rebound from yesterday’s lower close. 

As far as stocks hitting new 52-week highs and lows, the NYSE had 158 new 52-week highs to just 13 new lows; on the Nasdaq, the new 52-week highs outnumbered the lows 319 to 79, a sign that the move to risk-on assets last week has shown up in this week’s data. 

One of the 79 new 52-week lows on the Nasdaq was Ollie’s Bargain Outlet Holdings (OLLI), the Pennsylvania-based operator of discount stores whose tagline is “good stuff cheap,” which hit a new 52-week low of $87.65, its 13th in the past 12 months. 

The retailer plans to open 75 new stores in fiscal 2026 (January year-end), bringing its total footprint to 720 in 34 states. Jefferies analysts expect it to reach 1,300 stores over the next few years. 

With expansion being a major growth strategy, investors may be willing to overlook some of the business’s weaknesses. That’s especially true given OLLI hasn’t traded this low since June 2024. 

While it looks like a bargain, here’s why investors should think twice. 

Ollie’s Got Strengths

Ollie’s value-driven business model, which is desirable to many Americans struggling with higher gas prices, is the key to its success today and in the future. It’s this premise that drove the number of members in Ollie’s Army loyalty program to 17 million in 2025, up 12%. Founded in 1982, there's no question that the business has traction.   

And hey, “good stuff cheap”  rolls off the tongue and is easy to remember. Further, the treasure hunt aspect of its business model appeals to shoppers. That’s helped grow sales and earnings.

The past five years have seen Ollie’s top-line sales grow by 51.4% to $2.65 billion in 2025 from $1.75 billion in 2021, a compound annual growth rate (CAGR) of 10.9%. Same-store sales grew by 3.7% in 2025, 90 basis points higher than a year earlier. 

On the bottom line, it’s grown its earnings before interest, taxes, depreciation and amortization (EBIT) over the past four years by 127.4% to $297.7 million in 2025 from $130.9 million in 2022. I’ve used only 4 years for EBIT to put its growth in the best possible light. In 2021, its EBIT was $204.6 million, 56% higher than in 2022; the drop in 2022 was largely due to the company investing heavily in its supply chain to deliver for its customers. 

Another strength is its balance sheet. Its current ratio in 2025 was 2.4x -- current assets less current liabilities -- while it had no long-term debt and nearly $300 million in cash, giving it plenty of resources to continue opening new stores. 

Finally, analysts do like its stock. Of the 15 covering OLLI, 12 (4.53 out of 5) rate it a Buy, with a $139.53 target price, considerably above its current price.   

Few Glaring Weaknesses

A business that depends on selling discount merchandise is susceptible to lower margins as freight and other costs rise. With gas prices much higher today than six months ago, retailers are being forced to either eat the extra cost or pass it on to customers. Fortunately, Ollie’s gross margins have been consistent over the past three years, remaining in a tight range of 39.6% to 40.5%.

In March 2023, then-CEO John Swygert said that one of its three goals for fiscal 2023 was to improve its operating margins, while the other two were to grow its store base (check) and provide attractive deals that resonate with customers (check).

In 2022, its operating margin was 7.2%, down from 11.7% in 2021. Again, the supply chain reset, combined with store-opening expenses, was responsible for the decline. In 2023, it bounced back to 10.8%, and in 2024 and 2025, it was 11.2%.

In February 2025, Swygert became Executive Chairman, and President Eric van der Valk jumped into the top job. He’s managed to maintain a level of consistency that Swygert built over five years as CEO. 

What are the two biggest challenges it faces?

First, securing enough merchandise to sell for 720 stores is one thing; doing so for nearly double that number is another. So far, Ollie’s has done a good job of securing inventory and maintaining gross margins while growing by 70 to 90 stores a year. 

Secondly, despite a 20% correction over the past year, it still has an elevated valuation. 

For example, its current enterprise value of $5.76 billion is 11.3 times its EBITDA (earnings before interest, taxes, depreciation and amortization) according to S&P Global Market Intelligence. That’s lower than it’s been at any time in the past decade. 

While that does seem cheap, it depends on who you compare it to. 

The Bottom Line

TJX (TJX), which most closely resembles Ollie’s based on its treasure-hunt model, has an EV/EBITDA multiple of 15.0x, 370 basis points higher than Ollie's. 

Before you run out and buy OLLI, consider that TJX has an EBITDA margin of 14.0%, 70 basis points more than Ollie’s. Not a big deal, you say; TJX runs 5,214 stores with 117 million square feet, 7.2 and 5.1 times more, respectively. TJX generated $4.92 billion in free cash flow in fiscal 2025, more than 25 times Ollie’s. 

Over the past five years, Ollie’s stock lost 7.6% compared to a 125.5% gain for TJX. That’s a vote on which company investors feel executes their plan better. 

So, while Ollie’s stock is at a 52-week low, it’s not a shoo-in that it will deliver the goods over the next 12-24 months. The odds of TJX doing so, on the other hand, are much higher.   

You pay more for quality. I don’t think I have to spell out who that is.

Ollie’s is a fine company; the stock, not so much.