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Five Below: Looking For An Entry

Dec. 07, 2018 1:23 PM ETFive Below, Inc. (FIVE)3 Comments


  • Five Below beat both earnings and sales estimates and raised its full year guidance.
  • Margins continue to be strong as both comps and new store growth remain at impressive levels.
  • Even though consumer sentiment is peaking, I have no doubt that Five Below is a great long-term investment.

Five Below (NASDAQ:FIVE) just released its third-quarter earnings. The company beat both its own and Wall Street expectations and raised its full-year guidance one again. Margins were roughly unchanged while the company added a record number of new stores. All things considered, I believe we are dealing with an interesting long-term opportunity that should be bought during corrections.

Source: Five Below

3 Words: Better Than Expected

Five Below did it again. The company beat both its own expectations and official Wall Street expectations. Adjusted EPS came in at $0.22 versus expectations of $0.19. This is 22% higher compared to the prior-year quarter. Note that unadjusted GAAP EPS is $0.02 higher due to employee share-based compensation. Total net income reached $13.5 million compared to $9.9 million in Q3/2017. This translates to a 36.8% increase. Note that the company expected to generate net income between $9.7 - $10.7 million which is a very impressive beat.

Source: Estimize

Five Below's sales totaled $312.8 million versus $275.2 million in the previous-year quarter and analyst expectations of $303.0 million. The company's own expectations range was $301.0 - $304.0 million. The year-on-year sales growth rate is currently 21.6%. There is no notable sales growth trend which is good news since most established retailers have shown slowing sales trends.

One of the reasons why sales growth is higher than 20% is the company's expansion. 53 new stores were opened during the third quarter. This is a new record and translates to a growth number of 19.2% of total stores. The current store count is at 745 spread over 33 states.

Comparable store sales came in at 4.8% which is very impressive number considered that most peers are much lower. The company's strategy is completely paying off. Not only is the lower income customer are an interesting market to operate in, we

This article was written by

Leo Nelissen profile picture

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Comments (3)

Investing Without Pain profile picture
Was at FIVE this weekend. Place was popping. I Read their last 10-K and quarterly transcript. All their financials seem Great. No debt, pay off new stores within 7-8 months. Management is doing great. I'm looking for an entry too and believe that it might be NOW!?a few tranches might be smart
NextLevelTrading profile picture
Any buy of FIVE near the 100 level will be a home run. This stock could easily hit 150 in a year...
Snoopygolf profile picture
It's hard not to like this company and it's hard to not like their stores. With the recent volatility, I've traded in and out of this name a few times, as it seems to suffer some incredible swings during a day. Just in the past 2 trading sessions, I watched it drop to 95.62... up to 101... up to 105 on open and down to 95.50. It doesn't deserve that much of a whipsaw.

I've made it my largest position today on that price. Holding at least half at all times now.
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