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Five Below (FIVE) Q3 Earnings Report Preview: What To Look For

FIVE Cover Image
Five Below (FIVE) Q3 Earnings Report Preview: What To Look For

Discount retailer Five Below (NASDAQ:FIVE) will be announcing earnings results tomorrow after the bell. Here's what you need to know.

Last quarter Five Below reported revenues of $759 million, up 13.5% year on year, missing analyst expectations by 0.1%. It was a weaker quarter for the company, with revenue falling below Wall Street's expectations, but EPS beat. Gross margin increased year on year, which was a positive. On the other hand, while Five Below's full-year revenue guidance was maintained, it missed analysts' expectations. The company also reduced full year EPS guidance due to an increase in "shrink reserves."

Is Five Below buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Five Below's revenue to grow 12.9% year on year to $728.4 million, improving on the 6.2% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.23 per share.

Five Below Total Revenue
Five Below Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company missed Wall St's revenue estimates five times over the last two years.

Looking at Five Below's peers in the general merchandise retail segment, some of them have already reported Q3 earnings results, giving us a hint of what we can expect. Kohl's's revenues decreased 5.2% year on year, beating analyst estimates by 2.7% and Macy's reported revenue decline of 7.3% year on year, exceeding estimates by 4.3%. Kohl's traded down 2.9% on the results, Macy's was up 4%.

Read our full analysis of Kohl's's results here and Macy's's results here.

There has been positive sentiment among investors in the general merchandise retail segment, with the stocks up on average 10.3% over the last month. Five Below is up 11.9% during the same time, and is heading into the earnings with analyst price target of $212.7, compared to share price of $192.9.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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The author has no position in any of the stocks mentioned.

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