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USA: Five Below shares rise on earnings above expectations

Updated: Dec 9, 2021

Discount Variety Retail Chain Five Below's (listed NYSE: FIVE) net income hit 43 cents a share in the quarter, up from 36 cents a year earlier and beating the FactSet analyst consensus of 29 cents.

Five Below shares rose Thursday after the retailer reported fiscal-third-quarter results that beat expectations

For the quarter ended Oct. 30 net income at the Philadelphia company hit US$24.2 million, or 43 cents a share, up from US$20.4 million, or 36 cents a share, in the year-earlier quarter. The FactSet analyst consensus called for 29 cents in the latest quarter. Net sales soared 28% to US$608 million from the pandemic-affected US$477 million a year ago. The analyst consensus called for $564 million in the latest quarter. Comparable-store sales advanced 14.8% in the quarter against the FactSet estimate of 5.3% for the period. The stock recently traded near US$192, up 1.5%. The stock has traded on Thursday up as much as 8.9% at US$206.01.

Chief Executive Joel Anderson said the results reflected the company's strong execution "in a challenging supply chain environment. … We opened 52 new stores across 24 states [and] have completed our 171 new openings for the year.” Morningstar analyst Zain Akbari was impressed with the numbers, though he assigns the company no moat.

“Our $136 per share [fair] valuation of no-moat Five Below should rise by a mid- to high-single-digit percentage, after it announced third-quarter earnings above our expectations (15% comparable growth versus our 6% forecast). “We attribute the magnitude of the differential to pandemic-related volatility rather than a shift in Five Below’s long-term prospects.

“So our long-term view (low-double-digit percentage annual revenue growth and low-teens adjusted operating margins from fiscal 2022-30, on average) remains intact.


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