Preview: What to Expect From Five Below’s Earnings on Wednesday

The Philadelphia, Pennsylvania-based discount retailer Five Below is expected to report its fiscal third-quarter earnings of $0.29 per share, which represents a year-over-year decline of nearly 20% from $0.36 per share seen in the same period a year ago.

It is expected that this week’s results from the popular discount store retailer that sells products that cost up to $5 will also be good for investors watching the stock. Sales are expected to increase by over 15% to $562 million. Opening new stores and attracting new customers to existing locations will help the company achieve that growth.

The company anticipates net sales for the third quarter of fiscal 2021 in the range of $550 million to $565 million, compared with $476.6 million last year. Comparable sales are expected to grow by mid-single digits. The company expects to earn between 23 cents and 30 cents a share in the third quarter, compared with 36 cents a year ago, according to ZACKS Research.

Five Below shares fell about 2.5% to $204.74 on Friday. The stock rose over 17% so far this year.

Five Below Stock Price Forecast

Eleven analysts who offered stock ratings for Five Below in the last three months forecast the average price in 12 months of $234.80 with a high forecast of $300.00 and a low forecast of $184.00.

The average price target represents a 14.68% change from the last price of $204.74. From those 11 analysts, seven rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $230 with a high of $300 under a bull scenario and $120 under the worst-case scenario. The firm gave an “Overweight” rating on the discount retailer’s stock.

Several other analysts have also updated their stock outlook. Deutsche Bank raised the target price to $271 from $265. CFRA cut the price target to $210 from $220. Berenberg lowered the target price to $184 from $185.

Technical analysis suggests it is good to buy as 100-day Moving Average, and 100-200-day MACD Oscillator signals a strong buying opportunity.

Analyst Comments

“FIVE’s profile among pure B&M retailers is nearly unmatched (high teens top/bottom-line growth, no debt). It’s driven by a differentiated, defensible model focused on extreme value merchandise across diverse categories. FIVE is exiting the COVID-19 pandemic as a fundamentally stronger and more relevant business, with best-in-class growth characteristics, various company-specific initiatives in place, and solid liquidity,“ noted Simeon Gutman, equity analyst at Morgan Stanley.

“Valuation is below historical average on unwarranted near-term supply chain/cost concerns, which are overblown in our view. White space store growth (>50% unit runway remaining) and multi-year track record of ~20% square footage growth with >90% productivity.”

Check out FX Empire’s earnings calendar