After so many positive reports coming out on the state of U.S. retail, the market takes news of a miss very, very badly. In fact, the market had a bit of a tantrum last week, giving Wet Seal (NASDAQOTH:WTSLQ) and Five Below (NASDAQ:FIVE) nasty beatings on weaker than expected results. While these numbers certainly paled in comparison to The Gap's (NYSE:GPS) most recent results, for instance, the sell-off seems a bit overdone for Five Below.

The market was clearly not amused by Wet Seal and Five Below's results, and both tanked over 10% on Thursday. Five Below's report wasn't too bad on the face of it, but apparently investors expected more. Revenue increased 28% to around $111 million on a healthy 9% increase in comp-store sales. Adjusted EPS of $0.05 met the analyst consensus and EPS was up from $0.03 in the same period a year ago. 

Clearly, the expectations for Five Below must have been fairly high-strung if 28% sales growth on 9% comp-store sales growth disappointed the Street. Revenue came in slightly below the consensus estimate, as did fourth-quarter guidance.

The company guided for fourth-quarter revenue between $214 million and $217 million, assuming a 4% increase in comp-store sales. For the full year, revenue is expected to be in the range of $538 million-$541 million on a 5% comp-store sales increase, which also slightly missed estimates. 

The sell-off in Wet Seal shares seems more justified. The company lost $0.12 per share for the third quarter, in-line with estimates but down from a $0.11 per share loss last year. Compared with the company's previous estimate of a $0.02-$0.03 per share loss, this was a fairly poor showing.

Revenue wasn't much better for Wet Seal, sliding around 5.8% and once again missing estimates. The company's ArdenB chain led the decline with revenue down a hefty 27.5%. Guidance also disappointed, with Wet Seal's comp-store sales expected to decline by high single-to-low double digits. 

In any case, Wet Seal seems to be doing considerably worse than other fashion retailers. The Gap, for instance, is consistently beating expectations, with its last press release once again busting estimates. Comp-store sales for November were more than double the Street's 0.8% estimate. Revenue for the period rose 8% overall. Curiously, the stock dropped 2% following the report, and according to some analysts it was due to concerns surrounding future growth.

One of the reasons that Five Below tanked so hard could be its rich valuation. The company currently trades at around 95 times trailing earnings. While the company is growing revenue quickly, this figure seems a little steep. The Gap is also growing impressively, but it trades at only 14 times trailing earnings. Poor Wet Seal trades at a negative multiple.

Overall, there has been some fairly strange market action going on in retail stocks. Five Below's sell-off seems overdone based on its most recent results, but the extreme reaction may be due to its lofty valuation. Wet Seal on the other hand simply delivered a poor report, which would quite easily explain the beating it received.

Perhaps The Gap's sell-off was the strangest though, as the company appears to be in good shape and it has been consistently thrashing estimates. Additionally, the company is valued very attractively compared to the broader market at the moment. While the comparison with Five Below and Wet Seal might not be fair, The Gap has proven that it is definitely possible to make money in the current consumer spending environment.

Daniel James has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.