Attractive stocks have exceptional fundamentals. In the case of Five Below, Inc. (NASDAQ:FIVE), there's is a financially-robust company with an impressive history and a excellent growth outlook. In the following section, I expand a bit more on these key aspects. For those interested in digging a bit deeper into my commentary, take a look at the report on Five Below here.
Excellent balance sheet with solid track record
Investors seeking high cash growth potential should consider FIVE, with forecasted operating cash flow growth of 80%. This underlies the notable 23% return on equity over the next few years leading up to 2022. Over the past year, FIVE has grown its earnings by 33%, with its most recent figure exceeding its annual average over the past five years. The strong earnings growth is reflected in impressive double-digit 24% return to shareholders, which is an notable feat for the company.
FIVE is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that FIVE manages its cash and cost levels well, which is a key determinant of the company’s health. FIVE currently has no debt on its balance sheet. It has only utilized funding from its equity capital to run the business, which is rather impressive for a US$6.0b market cap company. FIVE has plenty of financial flexibility, without debt obligations to meet in the short term, as well as the headroom to raise debt should it need to in the future.
For Five Below, I've compiled three pertinent factors you should further research:
- Valuation: What is FIVE worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FIVE is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does FIVE return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from FIVE as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of FIVE? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
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 firstname.lastname@example.org. 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.