Five Below (FIVE) Stock Trades Up, Here Is Why

Stock Story

What Happened?

Shares of discount retailer Five Below jumped 3.8% in the morning session after the company reported third-quarter results that far exceeded its own forecasts and Wall Street's expectations.

Revenues for the quarter reached $1.038 billion, a significant 23.1% increase compared to the same period in the previous year. This growth was mainly fueled by a remarkable 14.3% surge in same-store sales, which was well above the company's guided range of 5% to 7%. The strong sales performance came from both an increase in customer transactions and a higher average ticket size. Furthermore, adjusted earnings per share came in at $0.68. This figure was nearly three times the upper end of the company's own guidance of $0.12 to $0.24 and beat analysts' consensus estimate by $0.42.

After the initial pop the shares cooled down to $176.66, up 4.9% from previous close.

Is now the time to buy Five Below? Access our full analysis report here.

What Is The Market Telling Us

Five Below’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 2 days ago when the stock gained 4.6% on the news that Mizuho raised its price target on the stock to $160 from $150, signaling optimism before the company's earnings release. The firm maintained its Neutral rating on the discount retailer but cited continued business momentum and expectations for a strong holiday season. This outlook was based on recent store checks and discussions which indicated Five Below's product assortment was well-positioned to drive sales. The positive analyst action occurred as the company was scheduled to report its quarterly earnings on December 3, with investors watching closely.

Five Below is up 78.3% since the beginning of the year, and at $176.66 per share, has set a new 52-week high. Investors who bought $1,000 worth of Five Below’s shares 5 years ago would now be looking at an investment worth $1,081.

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Mw As Americans Shop For Bargains, These -2

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Mw As Americans Shop For Bargains, These Discounters Might Fare Best In The Stock Market

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As Americans shop for bargains, these discounters might fare best in the stock market

MarketWatch

By Philip van Doorn

Even though dollar stores' shares have soared this year, their three-year growth projections and current P/E valuations still make them appear to be good values for long-term investors

These are four of the 11 discount retailers screened by MarketWatch.

The stock market always looks ahead, and investors can see that even affluent Americans have been changing their shopping habits and trying harder to get better prices.

Jeffry Bartash reported on a decline in consumer confidence, despite economic growth and a low unemployment rate. The combination of stubbornly high inflation and declining wage growth underscores the stock market's recent enthusiasm for discount retailers.

Through Thursday, shares of Dollar Tree Inc. (DLTR) were up 51% for 2025, while Dollar General Corp.'s stock (DG) was up 70%, with dividends reinvested.

Dollar Tree reported excellent results for its fiscal third quarter on Wednesday. During the earnings conference call, Chief Executive Michael Creedon said the retailer had "3 million more households shop with us" during the quarter when compared with the year-earlier quarter, according to a transcript provided by LSEG.

Dollar General followed suit on Thursday with its own set of strong quarterly numbers that included a 2.5% increase in foot traffic in its stores. The company's chief executive, Todd Vasos, said during a call with analysts that "disproportionate growth" in its number of customers came from higher-income households. The stock rose 14% that day.

With the dollar stores' stocks soaring, along with those of some other retailers known for bargain pricing, such as Five Below Inc. (FIVE), TJX Cos. (TJX) and Walmart Inc. (WMT), this is an appropriate moment to consider whether or not these stocks are fully priced.

So we screened a group of 11 retailers. The group includes eight stocks of companies in the S&P Composite 1500 Index XX:SP1500 categorized by LSEG as operators of discount stores, plus three more: Five Below, Burlington Stores Inc. (BURL) and Walmart.

In summary, Five Below has shown the fastest sales growth, Target Corp.'s stock (TGT) is the cheapest based on its price relative to earnings per share, and analysts see the most upside potential in Burlington Stores shares.

Recent results

Here are the 11 retailers, with Dollar Tree and Dollar General listed first, followed by the others in alphabetical order. The data includes the most recent reported increases or declines in quarterly comparable-store sales and total revenue from the year-earlier quarters. It also includes earnings per share for the most recent reported fiscal quarters and for the year-earlier quarters.

Retailers report for fiscal quarters that typically don't match the calendar, so the most recent quarterly figures for EPS are labeled "Q0," while the year-earlier figures are labeled "Q4."

The data has been provided by LSEG, except for Dollar Tree's adjusted comparable growth and revenue figures, which were taken from the company's earnings press release because it now categorizes its Family Dollar unit as "discontinued operations."

   Company                                  Comparable- store sales change  Revenue change  EPS - Q0  EPS - Q4 End date of reported fiscal quarter 
   Dollar Tree Inc.                                                   4.2%            9.4%     $1.20     $1.09              11/1/2025 
   Dollar General Corp.                                               2.5%            4.6%     $1.28     $0.89             10/31/2025 
   BJ's Wholesale Club Holdings Inc.                                  1.1%            4.9%     $1.16     $1.18              11/1/2025 
   Burlington Stores Inc.                                             1.0%            6.9%     $1.66     $1.43              11/1/2025 
   Costco Wholesale Corp.                                             5.7%            8.1%     $5.88     $5.30              8/31/2025 
   Five Below Inc.                                                   14.3%           23.1%     $0.66     $0.03              11/1/2025 
   Ollie's Bargain Outlet Holdings Inc.                               5.0%           17.5%     $1.00     $0.80              8/2/2025 
   PriceSmart Inc.                                                    7.5%            8.6%     $1.02     $0.95              8/31/2025 
   Target Corp.                                                      -2.7%           -1.6%     $1.52     $1.86              11/1/2025 
   TJX Cos.                                                           5.0%            7.5%     $1.30     $1.15              11/1/2025 
   Walmart Inc.                                                       4.2%            5.8%     $0.77     $0.57             10/31/2025 
                                                                                                                  Sources: LSEG, Dollar Tree filing

Five Below has been the runaway leader for comparable-store sales growth and has also led for revenue growth, followed by Ollie's Bargain Outlet.

Looking ahead

Leaving the 11 companies in the same order, here are forward price-to-earnings ratios for the stocks, along with projected compound annual growth rates for revenue and earnings per share going out three fiscal years from the current fiscal year. These projections are based on consensus estimates among analyst polled by LSEG, with one exception. Since Dollar Tree is now accounting for sales of its Family Dollar unit as discontinued operations, we are using the midpoint of Dollar Tree's own sales projection for its fiscal 2025.

For reference, projections are included at the bottom of the table for the consumer staples and consumer discretionary sectors of the S&P 500 SPX, along with those for the full index. Among this group of 11 retailers, all are in the consumer staples sector of the S&P Composite 1500, except for Burlington, Five Below, Ollie's and TJX, which are in the consumer discretionary sector.

The P/E ratios are prices divided by consensus 12-month earnings-per-share estimates. These are weighted by market capitalization for the sectors and the S&P 500.

   Company                                  Forward P/E  Projected revenue CAGR for next three years  Projected EPS CAGR for next three years 
   Dollar Tree Inc.                                17.8                                         4.0%                                    10.5% 
   Dollar General Corp.                            17.8                                         4.4%                                     9.7% 
   BJ's Wholesale Club Holdings Inc.               19.5                                         5.4%                                     8.1% 
   Burlington Stores Inc.                          23.4                                         9.4%                                    18.6% 
   Costco Wholesale Corp.                          43.1                                         7.4%                                    10.6% 
   Five Below Inc.                                 26.8                                        12.2%                                    10.4% 
   Ollie's Bargain Outlet Holdings Inc.            26.8                                        13.5%                                    15.3% 
   PriceSmart Inc.                                 21.8                                         8.2%                                    14.8% 
   Target Corp.                                    11.9                                         1.0%                                    -1.5% 
   TJX Cos.                                        29.2                                         6.1%                                    11.1% 
   Walmart Inc.                                    38.9                                         4.8%                                    10.0% 
   Consumer staples sector                         21.3                                         2.9%                                     6.7% 
   Consumer discretionary sector                   28.4                                         7.0%                                    14.1% 
   S&P 500                                         22.5                                         6.6%                                    13.2% 
                                                                                                            Sources: LSEG, Dollar Tree filing

Dollar Tree and Dollar General have projected revenue and EPS growth rates that are much higher than those of the consumer discretionary sector, while trading at forward P/E ratios that are much lower than that of the sector.

Walmart appears to be expensively priced relative to the S&P 500, especially when considering that its projected revenue and EPS growth rates are lower than those of the S&P 500.

Costco Wholesale Corp. (COST) has the highest forward P/E of the stocks on the list. The stock is now down 2% for 2025, with dividends reinvested. The company put up its own set of impressive quarterly numbers on Wednesday, but investors might have had concerns about a slowing growth rate for comparable-store sales.

Analysts' ratings and price targets

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Stock market today: S&P 500 ekes out gain as investor await inflation data

Investing.com

Investing.com -- The S&P 500 eked out a gain Thursday, as investors awaited further catalysts, a day ahead of a closed-monitored inflation measure that will likely play a role in the Federal Reserve’s policy-setting meeting next week.

At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average fell 31 points, or 0.1%, the S&P 500 gained 0.1%, and the NASDAQ Composite climbed 0.2%.

Weekly jobless claims decline; inflation data eyed

The number of Americans applying for first-time unemployment benefits declined to a three-year low last week.

Seasonally-adjusted initial jobless claims came in at 191,000 in the week ending on November 29, according to Labor Department data. It was a decrease of 27,000 from an upwardly-revised level of 218,000 in the prior week, and the lowest mark since September 2022.

The labor market comes ahead of key inflation data slated for Friday.

"The latest read on inflation is likely to intensify the ongoing debate among Fed officials as to their next policy move with the PCE potentially the deciding factor for the Fed regarding the lingering inflationary threats, and furthermore, whether a December rate cut is warranted," Stifel said in a note.

Adding to the dovish sentiment is growing speculation over the next Fed leadership. Reports that the Trump administration abruptly cancelled interviews with other Fed chair candidates have strengthened the view that Kevin Hassett -- widely perceived as more dovish than current chair Jerome Powell -- could take the helm in 2026.

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Salesforce lifts 2026 guidance

In the corporate sector, Salesforce (NYSE:CRM) shares rose after the software company lifted its fiscal 2026 revenue and adjusted income guidance.

Underpinning the upbeat outlook were projections for strong growth in demand for the group’s AI-enhanced agent platform, especially among its enterprise clients.

Five Below (NASDAQ:FIVE) stock also climbed after the value retailer reported third-quarter earnings that significantly beat analyst expectations, driven by robust comparable sales growth and successful store expansion.

By contrast, Snowflake (NYSE:SNOW) stock dropped sharply after the cloud-based data storage stock provided a slightly disappointing outlook for its product revenue growth for the January quarter.

Elsewhere, Meta Platforms (NASDAQ:META) rose 3% after Bloomberg News reported that Meta is expected to make up to 30% budget cuts for its Metaverse initiative. The update comes as Brussels opened a new antitrust investigation into the tech giant over its rollout of artificial intelligence features in WhatsApp, the European Commission said on Thursday, reflecting rising scrutiny of Big Tech’s use of generative AI.

Kroger Company (NYSE:KR), meanwhile, fell after reporting third-quarter revenue that fell short of estimates.

Peter Nurse, Ayushman Ojha contributed to this article

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Stock market today: S&P 500 ekes out gain ahead of key inflation data

Investing.com

Five Below

+3.90%

Advanced Micro Devices

At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average fell 31 points, or 0.1%, the S&P 500 gained 0.1%, and the NASDAQ Composite climbed 0.2%.

Weekly jobless claims decline; inflation data eyed

The number of Americans applying for first-time unemployment benefits declined to a three-year low last week.

The labor market comes ahead of key inflation data slated for Friday.

Get more stock picks by Wall Street analysts by upgrading to InvestingPro - get 55% off today

Salesforce lifts 2026 guidance

In the corporate sector, Salesforce (NYSE:CRM) shares rose after the software company lifted its fiscal 2026 revenue and adjusted income guidance.

Underpinning the upbeat outlook were projections for strong growth in demand for the group’s AI-enhanced agent platform, especially among its enterprise clients.

By contrast, Snowflake (NYSE:SNOW) stock dropped sharply after the cloud-based data storage stock provided a slightly disappointing outlook for its product revenue growth for the January quarter.

Kroger Company (NYSE:KR), meanwhile, fell after reporting third-quarter revenue that fell short of estimates.

Peter Nurse, Ayushman Ojha contributed to this article

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