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Examining Five Below, Inc.'s (NASDAQ:FIVE) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess FIVE's latest performance announced on 02 February 2019 and weigh these figures against its longer term trend and industry movements.
Commentary On FIVE's Past Performance
FIVE's trailing twelve-month earnings (from 02 February 2019) of US$150m has jumped 46% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 29%, indicating the rate at which FIVE is growing has accelerated. What's the driver of this growth? Let's see if it is merely a result of an industry uplift, or if Five Below has seen some company-specific growth.
In terms of returns from investment, Five Below has invested its equity funds well leading to a 24% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 15% exceeds the US Specialty Retail industry of 5.5%, indicating Five Below has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Five Below’s debt level, has declined over the past 3 years from 32% to 27%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Five Below to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for FIVE’s future growth? Take a look at our free research report of analyst consensus for FIVE’s outlook.
- Financial Health: Are FIVE’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 02 February 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.