Why Five Below Stock Is Down After Q4 Results

Five Below, Inc. FIVE shares are trading lower Thursday after the company posted its fourth-quarter financial results and issued guidance. 

The Details:

The company reported quarterly earnings of $3.65 per share, up from $3.07 per share from the same period last year. Quarterly revenue clocked in at $1.34 billion, up from $1.12 billion year-over-year, according to data from Benzinga Pro.

Five Below sees first-quarter earnings of between 58 cents and 69 cents per share and revenue in the range of $826 million to $846 million, based on opening approximately 55 to 60 new stores and assuming an approximate flat to 2% increase in comparable sales.

"Holiday 2023 marked a strong end to the year for sales performance as our amazing assortment of Wow product drove yet another quarter of comp transaction growth, led by the Five Beyond format stores. In fiscal 2023, we opened a record 205 new stores and ended the year with over half of our comparable stores in the Five Beyond format. The benefit of strong sales performance to our profitability was offset by higher than anticipated shrink headwinds, resulting in earnings at the low end of our guidance range," said Joel Anderson, CEO of Five Below.

Several analysts lowered price targets on Five Below following the print: 

• JP Morgan analyst Matthew Korn maintained an Overweight rating and lowered the price target from $222 to $215.
• Wells Fargo maintained an Equal-Weight rating and lowered the price target from $200 to $180 on the stock. 
• Mizuho analyst David Bellinger maintained Five Below with a Buy and lowered the price target from $225 to $215.
• Evercore ISI Group maintained its Outperform rating and lowered the price target from $240 to $230.
• UBS analyst Michael Lasser maintained a Buy rating and lowered the price target from $270 to $245 on the stock.

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FIVE Stock Prediction 2024:

When buying a stock for a longer time horizon, it is important for investors to assess where they think the stock is headed in the future.

When mapping a stock's future trajectory, investors should consider factors including the future earnings expectations and expected performance against a benchmark.

Five Below FIVE revenue has grown at an average rate of 18.78% annually over the past 5 years. The average 1-year price target from analysts is $222.54, representing an expected 24.5% upside in 2025.

While past performance is not a guarantee of future results, investors should also look at a stock's historical performance when compared to both a benchmark index and the company's peers. Shares of Five Below have seen an annualized return of 1.92%, underperforming the S&P500 index by 7.94%. This compares to 3.91% growth in the overall Consumer Discretionary sector. Five Below has a beta of 0.63.

FIVE Price Action: According to Benzinga Pro, Five Below shares are down 15.6% at $176.47 at the time of publication.

Image: Megan Rexazin Conde from Pixabay