Five Below And Dollar General Q2 Earnings Preview: Aiming To Emulate Dollar Tree's Beat

Zinger Key Points
  • Dollar General and Five Below report quarterly earnings this week.
  • A look at estimates and comments from analysts and why Dollar Tree's recent quarterly report could be important.
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Two leading discount retailers are set to report quarterly earnings this week, aiming to emulate a peer company that recently beat analysts’ estimates.

Here’s a look at what investors should know ahead of second quarter financial results from Five Below Inc FIVE and Dollar General DG.

Earnings Estimates: Five Below will report second quarter financial results after market close Wednesday, Aug. 30. Analysts expect the company to report revenue of $758.3 million, according to data from Benzinga Pro.

The company reported revenue of $668.9 million in the second quarter of last year and revenue of $726.7 million in the first quarter of the current fiscal year.

The company has beaten seven and missed five of the last 12 quarters for revenue estimates, including missing four of the last six quarters.

Analysts expect the company to report second quarter earnings per share of 83 cents. The company reported earnings of 74 cents per share in the second quarter of last year and earnings per share of 67 cents in the first quarter of the current fiscal year.

Over the last 11 quarters, Five Below has beat analysts’ EPS estimates in nine quarters, missed in one quarter and matched in one quarter.

The company previously forecasted for second quarter revenue to come in the range of $755 million to $765 million.

Turning to Dollar General, they're set to report second quarter financial results before market open on Thursday, Aug. 31.

Analysts expect the company to report second quarter revenue of $9.9 billion. The company reported revenue of $9.4 billion in the second quarter of last year and reported revenue of $9.3 billion in the first quarter of the current fiscal year.

Dollar General has beaten revenue estimates in three of the last five quarters and 17 of the last 20. However, they've fallen short of estimates in the two most recent consecutive quarters.

Analysts expect Dollar General to report second quarter earnings per share of $2.46. The company reported earnings of $2.98 per share in the second quarter of last year and earnings of $2.34 per share in the first quarter of the current fiscal year.

After a string of earnings beats from 2019 to 2021 with seven straight quarterly beats and 10 beats in 11 quarters, results have been mixed. Over the last six quarters, Dollar General has beaten EPS estimates twice, matched estimates twice and missed twice.

Related Link: Five Below's Consumables Strength A Silver Lining In Tight Consumer Spending

What Analysts Are Saying: Ahead of the earnings report from Five Below, several analysts have been out with bullish coverage of the retailer.

Selling “trend-right merchandise” and being value-focused could make Five Below stand out, according to Telsey analyst Joseph Feldman.

Feldman, who has an Outperform rating and a $225 price target, has estimates for Five Below’s second quarter that are above consensus.

“We continue to believe Five Below has a long runway of growth ahead as it progresses on its Triple-Double strategy, which aims to triple the store base to 3,500+ by 2030 and double sales and EPS relative to 2021 by the end of 2025,” Feldman said.

The analyst said data shows increased visits to Five Below in the second quarter.

“We also believe the company has been able to ride the Barbie wave with the release of the blockbuster film in July.”

Roth MKM analyst David Bellinger has a Buy rating and a $225 price target on Five Below as well.

Meanwhile, Dollar General could benefit from at-home consumption and higher inflation, according to Feldman.

Feldman, who has an Outperform rating and $185 price target on Dollar General, sees consumers favoring value-priced merchandise in the current economic conditions.

The analyst sees factors like store openings, remodels, self-checkouts, new products, healthcare services and DG Fresh supply chain upgrades helping boost the company going forward.

Edward Jones analyst Brian Yarbrough recently upgraded Dollar General shares from Hold to Buy and has no price target.

Key Items To Watch: The earnings reports from Dollar General and Five Below will come a week after Dollar Tree Inc DLTR reported second quarter results.

Dollar Tree beat earnings per share and revenue estimates from analysts, with sales up 8.2% year-over-year. The company reported same-store sales up 6.9% year-over-year.

Shares of Dollar Tree fell after the company issued third quarter guidance that was below estimates.

After the report from Dollar Tree, analysts and investors will want to see Five Below and Dollar General beat estimates and also issue strong forward-looking guidance.

Another key item to watch for Five Below will be comments on the back-to-school season. While the full results of the back-to-school shopping season won't reflect in the second quarter, insights might be provided regarding the company's performance during this crucial shopping period.

FIVE, DG, DLTR Price Action: Five Below shares trade at $177.32 versus a 52-week trading range of $123.57 to $220.19. Five Below shares are up 3% year-to-date and up 41% over the last 52 weeks.

Dollar General shares trade at $155.48 versus a 52-week trading range of $151.27 to $261.57. Shares of Dollar General are down 37% year-to-date and down 37% over the last 52 weeks.

Dollar Tree shares trade at $123.82 versus a 52-week trading range of $122.39 to $170.36. Shares of Dollar Tree ae down 12% year-to-date and down 10% over the last year.

Read Next: Walmart Gains And Dollar Tree Adapts While Dollar General Faces Challenges 

Photo: Shutterstock

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Posted In: Analyst ColorPrice TargetPreviewsReiterationAnalyst RatingsTrading IdeasDiscount RetailerDiscount Retailersdollar storesJoseph FeldmanRetail StocksTelsey
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