Earnings results often indicate what direction a company will take in the months ahead. With Q1 behind us, let’s have a look at Ollie's (NASDAQ: OLLI) and its peers.

Discount retailers understand that many shoppers love a good deal, and they focus on providing excellent value to shoppers by selling general merchandise at major discounts. They can do this because of unique purchasing, procurement, and pricing strategies that involve scouring the market for trendy goods or buying excess inventory from manufacturers and other retailers. They then turn around and sell these snacks, paper towels, toys, clothes, and myriad other products at highly enticing prices. Despite the unique draw and lure of discounts, these discount retailers must also contend with the secular headwinds of online shopping and challenged retail foot traffic in places like suburban strip malls.

The 5 discount retailer stocks we track reported a mixed Q1. As a group, revenues beat analysts’ consensus estimates by 0.7% while next quarter’s revenue guidance was 1.6% below.

Thankfully, share prices of the companies have been resilient as they are up 7% on average since the latest earnings results.

Best Q1: Ollie's (NASDAQ: OLLI)

Often located in suburban or semi-rural shopping centers, Ollie’s Bargain Outlet (NASDAQ: OLLI) is a discount retailer that acquires excess inventory then sells at meaningful discounts.

Ollie's reported revenues of $576.8 million, up 13.4% year on year. This print exceeded analysts’ expectations by 1.9%. Overall, it was a strong quarter for the company with a solid beat of analysts’ EBITDA estimates and a decent beat of analysts’ gross margin estimates.

“We had a strong first quarter, highlighted by accelerated store growth and better than expected sales and earnings,” said Eric van der Valk, President and Chief Executive Officer.

Ollie's achieved the biggest analyst estimates beat but had the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is up 20.4% since reporting and currently trades at $134.82.

Is now the time to buy Ollie's? Access our full analysis of the earnings results here, it’s free.

Five Below (NASDAQ: FIVE)

Often facilitating a treasure hunt shopping experience, Five Below (NASDAQ: FIVE) is an American discount retailer that sells a variety of products from mobile phone cases to candy to sports equipment for largely $5 or less.

Five Below reported revenues of $970.5 million, up 19.5% year on year, outperforming analysts’ expectations by 1.3%. The business performed better than its peers, but it was unfortunately a mixed quarter with an impressive beat of analysts’ EBITDA estimates but full-year EPS guidance missing analysts’ expectations significantly.

Five Below pulled off the fastest revenue growth and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 15.7% since reporting. It currently trades at $140.

Is now the time to buy Five Below? Access our full analysis of the earnings results here, it’s free.

Weakest Q1: Burlington (NYSE: BURL)

Founded in 1972 as a discount coat and outerwear retailer, Burlington Stores (NYSE: BURL) is now an off-price retailer that has broadened into general apparel, footwear, and home goods.

Burlington reported revenues of $2.50 billion, up 6% year on year, falling short of analysts’ expectations by 0.9%. It was a slower quarter as it posted EPS guidance for next quarter missing analysts’ expectations significantly and full-year EPS guidance missing analysts’ expectations.

Burlington delivered the weakest performance against analyst estimates in the group. Interestingly, the stock is up 15.7% since the results and currently trades at $276.39.

Read our full analysis of Burlington’s results here.

Ross Stores (NASDAQ: ROST)

Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ: ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.

Ross Stores reported revenues of $4.98 billion, up 2.6% year on year. This number surpassed analysts’ expectations by 0.5%. However, it was a slower quarter as it produced EPS guidance for next quarter missing analysts’ expectations significantly and revenue guidance for next quarter missing analysts’ expectations.

Ross Stores had the slowest revenue growth among its peers. The stock is down 10.3% since reporting and currently trades at $136.58.

Read our full, actionable report on Ross Stores here, it’s free.

TJX (NYSE: TJX)

Initially based on a strategy of buying excess inventory from manufacturers or other retailers, TJX (NYSE: TJX) is an off-price retailer that sells brand-name apparel and other goods at prices much lower than department stores.

TJX reported revenues of $13.11 billion, up 5.1% year on year. This result topped analysts’ expectations by 0.7%. Taking a step back, it was a slower quarter as it recorded EPS guidance for next quarter missing analysts’ expectations and full-year EPS guidance missing analysts’ expectations.

The stock is down 6.5% since reporting and currently trades at $126.17.

Read our full, actionable report on TJX here, it’s free.

Market Update

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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