Why Five Below Shares Flew

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of specialty value retailer Five Below (NASDAQ: FIVE  ) surged 15% today after its quarterly results and outlook topped Wall Street expectations.

So what: The stock has been on a roller coaster in 2013 on uncertainty over sustainable growth, but today's second-quarter results -- adjusted EPS spiked 175% on a revenue increase of 35% -- suggest that management is making solid market share headway. In fact, comparable store sales grew 6.6% over the year-ago period, giving analysts plenty of good vibes over its competitive position and ability to grow profitably.

Now what: Management now sees full-year adjusted EPS of $0.68-$0.71 on revenue of $531 million-$536 million, above its prior view of $0.65-$0.68 on revenue of $524 million-$529 million. "We believe the performance of both our new and existing stores, as well as strong execution by the entire Five Below team, have us well-positioned to deliver on our goals for the year," said Co-Founder and CEO Thomas Vellios. Of course, with the stock busting through its 52-week high today and trading at a 40-plus forward P/E, much of that bullishness might already be baked into the valuation.

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