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Category: Stock Market and Five Below
Date: 5 December 2019 Stock Price: $118.06 We take a look at the 3rd quarter earnings release of their 2019 fiscal year of Five Below a value retailer offering trend-right, high-quality products loved by tweens, teens and beyond.
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About Five Below
Five Below is a leading high-growth value retailer offering trend-right, high-quality products loved by tweens, teens and beyond. We know life is way better when you’re free to “let go & have fun” in an amazing experience filled with unlimited possibilities. With most items priced $1-$5, and some extreme value items priced up to just $10, we make it easy to say YES! to the newest, coolest stuff across 8 awesome Five Below worlds: Style, Room, Play, Create, Party, Candy, New & Now and Ten Below Tech. Founded in 2002 and headquartered in Philadelphia, Pennsylvania, Five Below today has 900 stores and counting in 36 states
Overview of Five Below's 3rd quarter 2019 earnings report
The data below refers to the latest quarter unless specified otherwise:
- Net sales $377.438 million (up from $312.823 million from the same quarter of the previous year)
- Net sales increased by % over the last 12 months
- Cost of sales: $258.756 million (up from $210.733million for the same quarter of the previous year)
- Cost of sales increased by 22.8% over the last 12 months
- Net income: $10.189 million (down from $13.516 million for the same quarter of the previous year)
- Diluted earnings per share: $0.18 (up from $0.24 for the same quarter of the previous year)
- PE ratio: 36.9
- Diluted weighted-average shares outstanding: 56.019 million (down from 56.228 million for the same quarter of the previous year)
- Cash and cash equivalents: $77.496 million
- Cash and cash equivalents per share: $1.38
- Cash and cash equivalents makes up 1.17% of Five Below's market capital
- Cash and cash equivalents makes up 4.2% of Five Below's total assets
- Merchandise inventories: $419.340 million
- Merchandise inventories makes up 22.9% of Five Below's total assets.
- Stockholders equity in Five Below: $645.391 million
- Stockholders equity per share in Five Below: $11.52
- Five Below is trading at 10.24 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firm tend to trade at
Five Below's management commentary on their 3rd quarter 2019 earnings and fiscal guidance
PHILADELPHIA, PA, Dec. 04, 2019 (GLOBE NEWSWIRE) -- Five Below, Inc. (NASDAQ: FIVE) today announced financial results for the third quarter and for the year-to-date period ended November 2, 2019
Joel Anderson, President and CEO of Five Below, stated, “We are very pleased with our third quarter performance. Our strong top and bottom line results exceeded our expectations and were driven by continued strength from our new stores as well as broad-based performance across our worlds. We also opened a record 61 stores in diverse markets during the quarter, and have since completed our 150 planned new stores for the year.” Mr. Anderson continued, “We are ready and excited to deliver a great holiday shopping experience for our customers. We believe our assortment of $1 to $5 items, as well as our new Ten Below Gift Shop section highlighting toys and games, reinforces our position as a go-to destination for holiday stocking stuers and gifts at unbeatable value. We remain rmly committed to providing extreme value to our customers on fresh, high quality, trend-right products with a fun, dierentiated shopping experience.”
Joel Anderson, President and CEO of Five Below, stated, “We are very pleased with our third quarter performance. Our strong top and bottom line results exceeded our expectations and were driven by continued strength from our new stores as well as broad-based performance across our worlds. We also opened a record 61 stores in diverse markets during the quarter, and have since completed our 150 planned new stores for the year.” Mr. Anderson continued, “We are ready and excited to deliver a great holiday shopping experience for our customers. We believe our assortment of $1 to $5 items, as well as our new Ten Below Gift Shop section highlighting toys and games, reinforces our position as a go-to destination for holiday stocking stuers and gifts at unbeatable value. We remain rmly committed to providing extreme value to our customers on fresh, high quality, trend-right products with a fun, dierentiated shopping experience.”
Fourth Quarter and Fiscal 2019 Outlook:
The Company expects the following results for the fourth quarter and full year scal 2019. This outlook now includes:
The expectation that Section 301 taris as currently enacted by the Office of the United States Trade Representative will remain in place on Lists 1, 2 and 3 goods at 25% and on List 4A goods at 15%, with List 4B goods at 15%, to become effective December 15, 2019. The effective tax rate in fiscal 2019 is expected to be approximately 22.0%, which excludes any potential future impact from share-based accounting. The diluted weighted average shares outstanding does not include any potential future impact from share repurchases.
For the fourth quarter of fiscal 2019:
For the full year of fiscal 2019:
The Company expects the following results for the fourth quarter and full year scal 2019. This outlook now includes:
The expectation that Section 301 taris as currently enacted by the Office of the United States Trade Representative will remain in place on Lists 1, 2 and 3 goods at 25% and on List 4A goods at 15%, with List 4B goods at 15%, to become effective December 15, 2019. The effective tax rate in fiscal 2019 is expected to be approximately 22.0%, which excludes any potential future impact from share-based accounting. The diluted weighted average shares outstanding does not include any potential future impact from share repurchases.
For the fourth quarter of fiscal 2019:
- Net sales are expected to be in the range of $717 million to $732 million based on opening approximately 6 new stores and assuming a 2% to 3% increase in comparable sales.
- Net income is expected to be in the range of $110.7 million to $115.2 million.
- Diluted income per common share is expected to be in the range of $1.97 to $2.05 on approximately 56.1 million diluted weighted average shares outstanding.
For the full year of fiscal 2019:
- Net sales are expected to be in the range of $1.877 billion to $1.892 billion based on opening 150 new stores and assuming an approximate 2.5% increase in comparable sales.
- Net income is expected to be in the range of $175.4 million to $179.9 million.
- Diluted income per common share is expected to be in the range of $3.11 to $3.19 on approximately 56.3 million diluted weighted average shares outstanding
Five Below (NASDAQ:FIVE) stock price history
The image below, obtained from Google shows the stock price history of Five Below over the last 5 years. And its been a very volatile but overall a good time for stockholders of Five Below. 5 years ago the stock trading around $37.60 and its currently trading at $118.06. That's a very healthy return of 214% over the last 5 years being provided by Five Below to stockowners.
The stock is trading at a lot closer to its 52 week high of $148.22 and is far away from its 52 week low of $86.57, which is a clear indication that short term sentiment and momentum of Five Below is overwhelmingly positive.
The stock is trading at a lot closer to its 52 week high of $148.22 and is far away from its 52 week low of $86.57, which is a clear indication that short term sentiment and momentum of Five Below is overwhelmingly positive.
Recent coverage of Five Below
The extract below touches on the latest results from Five Below as obtained from TheStreet.com.
Shares of Five Below (FIVE) - Get Report flew off the shelves Friday after the discount retailer won a big boost from an industry analyst. Five Below's stock price rose 1.87% to $126.65 a share after William Blair initiated coverage of the retailer's stock with an overweight rating, according to published reports. Analysts at William Blair cited the retailer's "treasure hunt appeal" for shoppers, with the chain offering "extreme value," given its pricing of $5 and below for a range of items. William Blair analyst Daniel Hofkin also cited the company's "pristine balance sheet" and "solid free cash flow" even as it aggressively rolls out new stores, Bloomberg reported.
And while Five Below's stock price is not cheap compared to its industry peers, the "higher multiples" make sense based on the retailer's "consistent execution," the analyst report noted. Five Below opened 44 new stores during the second quarter, bringing its total up to 833 stores in 36 states, according to Zacks Investment Research. The discount retailer is currently in the midst of opening up another 55 stores in the third quarter ending in November, with a goal of 150 new stores by the end of the fiscal year.
Read the full article here.
Shares of Five Below (FIVE) - Get Report flew off the shelves Friday after the discount retailer won a big boost from an industry analyst. Five Below's stock price rose 1.87% to $126.65 a share after William Blair initiated coverage of the retailer's stock with an overweight rating, according to published reports. Analysts at William Blair cited the retailer's "treasure hunt appeal" for shoppers, with the chain offering "extreme value," given its pricing of $5 and below for a range of items. William Blair analyst Daniel Hofkin also cited the company's "pristine balance sheet" and "solid free cash flow" even as it aggressively rolls out new stores, Bloomberg reported.
And while Five Below's stock price is not cheap compared to its industry peers, the "higher multiples" make sense based on the retailer's "consistent execution," the analyst report noted. Five Below opened 44 new stores during the second quarter, bringing its total up to 833 stores in 36 states, according to Zacks Investment Research. The discount retailer is currently in the midst of opening up another 55 stores in the third quarter ending in November, with a goal of 150 new stores by the end of the fiscal year.
Read the full article here.
Five Below (NASDAQ: FIVE) latest stock valuation
So based on Five Below's latest earnings report what are their stock currently worth? Based on Five Below's current earnings report and the updated fiscal guidance provided we have a target (full value) price in the stock at $87.30 So we believe at its current price Five Below's stock is overvalued.
We usually recommend that fundamental long term or value investors look to enter a stock at least 10% below our target (full value) price, which in this case is $87.30. We would therefore suggest looking to enter into the stock of Restoration Warehouse at around $78.60 or below.
We expect the stock of Five Below to pull back from current levels to levels closer to our target price/ full value price.
We usually recommend that fundamental long term or value investors look to enter a stock at least 10% below our target (full value) price, which in this case is $87.30. We would therefore suggest looking to enter into the stock of Restoration Warehouse at around $78.60 or below.
We expect the stock of Five Below to pull back from current levels to levels closer to our target price/ full value price.
Next earnings release of Five Below
It is expected that Five Below will release their 4th quarter and full fiscal 2019 earnings report in late February 2020