Five Below gains on beat and raise, analysts raise numbers

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By Senad Karaahmetovic

Five Below (NASDAQ:FIVE) posted Q3 earnings that came ahead of the average analyst estimates and paved the way for the company to raise its full-year forecast.

FIVE posted EPS of $0.29 on revenue of $607.6 million, which compares to the consensus of earnings of $0.14 on sales of $610.46M. Net sales rose by over 6% in the third quarter while comparable sales fell 2.7%, better than the feared 5.9% drop.

Joel Anderson, President and CEO of Five Below, said, "We delivered third quarter results that were better than our guidance in spite of the difficult macro environment and challenging year-over-year comparison."

For this quarter, Five Below projects flat comparable sales (up or down 1%), EPS of $3.01 (up or down $0.08), and sales in the range of $1.09B-1.1B. This compares to the analyst consensus of earnings of $2.93 on sales of $1.08B.

For FY2023, Five Below raised its EPS forecast to $4.55-4.71, up from the prior $4.26-4.56, and higher than the consensus of $4.41. Comparable sales are expected to decline between 2-3% on net sales of $3.05B (up or down $10M), higher than the consensus that called for FY comp. sales to decline 3.1% and revenue of $3B (Bloomberg consensus).

KeyBanc analysts increased the price target to $188 from the prior $172 on better-than-feared results.

"While the investing landscape for consumer/retail remains difficult at this time, we believe FIVE has strong merchandising and store remodeling opportunities to help navigate the next two to three years. As such, we believe FIVE remains one of the most compelling growth opportunities in retailing as we look out LT," they said.

Oppenheimer analysts said the results were "much better than expected."

"We look upon improved fundamental trends and particularly strengthening sales at FIVE lately as suggestive that the company’s merchandise-driven and value-focused business model is resonating well with consumers, amid a softer, but still not utterly weak macro backdrop," they said.

As of 08:30 GMT (13:30 EST), FIVE stock is up 9.1%.