Market Overview

Sell-Side Anticipation Builds For Five Below's Q4 Release


Five Below Inc (NASDAQ: FIVE) is set to report its fourth quarter results on March 22, and investors focus would be on the post-holiday comps, California expansion and commentary on new store performance.

Michael Lasser of UBS expects EPS of $0.89, in line with consensus, and said trends improved in January after a soft holiday season at Five Below. The analyst has a Buy rating and $50 price target on the stock.

“We model a 1% comp for 4Q'16, which is in-line with the cons. est. of 0.9% (it comped up 0.5% during the 10-week holiday period). Assuming 15% of sales occur in the last 3 weeks of 4Q, our forecast suggests it did a 3% comp during this period,” Lasser wrote in a note.

Looking ahead, the analyst noted the company should benefit from easy comparisons. Lasser sees 2.7 percent growth in same-store sales for FY2017, which is slightly ahead of the 2.6 percent consensus estimate. The analyst also predicts FY2017 EPS of $1.60, topping Street view of $1.58.

In addition, Lasser “conservatively forecast” new store productivity at 90 percent as it enters the California market in the first half of 2017.

Lasser pointed out that same-store sales growth could accelerate from emerging trends such as the Slime fad, promotion of a Beauty and the Beast poster on Instagram, which is sold in stores.

“If it could secure licensed products around this movie, it could have an impact similar to the benefit from Frozen a few years ago,” Lasser added.

Loop Capital’s Expectations

Meanwhile, Anthony Chukumba of Loop Capital expects fourth quarter and F2017 EPS of $0.89 and $1.60 are in line with and $0.02 above consensus, respectively. The analyst projects a 1 percent rise in the fourth quarter comps.

Following the rare third quarter decline, investors will be focusing on post-holiday comparable sales trends and management's F2017 guidance.

Chukumba reaffirmed his Buy rating and $54 price target on the shares.

“Given Five Below’s unique and differentiated concept, compelling value proposition, and attractive long-term square footage growth prospects, we believe the company is undervalued at current levels,” Chukumba wrote in a note.


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Benzinga’s Top Upgrades, Downgrades For March 16, 2017

Latest Ratings for FIVE

Nov 2020Morgan StanleyMaintainsOverweight
Nov 2020Loop CapitalDowngradesBuyHold
Sep 2020Wolfe ResearchInitiates Coverage OnOutperform

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