Please ensure Javascript is enabled for purposes of website accessibility

Why Five Below, Inc. Stock Popped Today

By Jeremy Bowman - Mar 23, 2017 at 12:58PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The discount retailer surged on another strong earnings report and expectations for 2017.

What happened

Shares of Five Below, Inc. (FIVE -3.12%) were surging higher today after the discount retailer beat expectations in its fourth-quarter earnings report. As of 11:04 a.m. EDT, the stock was up 11.6%.

So what

The retailer, which sells everything for $5 or less, said revenue increased 18.9% to $388.1 million, ahead of estimates at $387 million, as comparable sales increased 1%. Earnings per share, meanwhile, also bumped up 17% to $0.90, topping the consensus by $0.01.

A Five Below store inside a mall

Image source: The Motley Fool.

CEO Joel Anderson commented, "Our performance in 2016 once again illustrates the strength, consistency and broad appeal of the Five Below model with a compelling merchandise assortment designed to 'wow' our customers at incredible values." He also noted the company completed its 11th consecutive year of comparable-sales growth.

Now what 

Investors were also impressed with Five Below's guidance for 2017, as the company expects to open another 100 stores in the current year, increasing its base by 19%. Management also projected revenue of $1.21 billion to $1.23 billion, which includes an extra week in the year, representing an increase of 21% to 23% over the $1 billion in 2016. On the bottom line, the company expects earnings per share to improve from $1.30 to $1.55-$1.61. Both projections were in line with analyst estimates. Management also called for a low-single-digit increase in comparable sales this year.

In a challenging retail climate, Five Below's ability to aggressively open new stores and grow comparable sales is impressive, and the company's mixture of cheap, fun products appears to be protected from e-commerce threats. Considering that, I'd expect profits to continue marching higher.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Five Below, Inc. Stock Quote
Five Below, Inc.
FIVE
$124.19 (-3.12%) $-4.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.