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Five Below (FIVE) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
Honeywell (HON) might move higher on growing optimism about its earnings prospects, which is reflected by its upgrade to a Zacks Rank 2 (Buy).

Five Below (FIVE) closed at $136.65 in the latest trading session, marking a -0.77% move from the prior day. This change lagged the S&P 500's 0.16% loss on the day. At the same time, the Dow added 0.01%, and the tech-heavy Nasdaq lost 0.26%.

Prior to today's trading, shares of the discount retailer had gained 9.8% over the past month. This has outpaced the Retail-Wholesale sector's gain of 0.34% and the S&P 500's loss of 0.19% in that time.

Investors will be hoping for strength from FIVE as it approaches its next earnings release. The company is expected to report EPS of $0.35, unchanged from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $365.70 million, up 23.41% from the year-ago period.

FIVE's full-year Zacks Consensus Estimates are calling for earnings of $3.08 per share and revenue of $1.89 billion. These results would represent year-over-year changes of +15.79% and +21.27%, respectively.

Any recent changes to analyst estimates for FIVE should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.03% higher. FIVE is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note FIVE's current valuation metrics, including its Forward P/E ratio of 44.76. Its industry sports an average Forward P/E of 10.98, so we one might conclude that FIVE is trading at a premium comparatively.

It is also worth noting that FIVE currently has a PEG ratio of 1.54. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Retail - Miscellaneous stocks are, on average, holding a PEG ratio of 1.85 based on yesterday's closing prices.

The Retail - Miscellaneous industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 93, putting it in the top 37% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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