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Five Below (FIVE) Queues Up for Q4 Earnings: Factors to Know

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Five Below, Inc. FIVE is likely to register an increase in the top line when it reports fourth-quarter fiscal 2020 results on Mar 17, after the market closes. The Zacks Consensus Estimate for revenues is pegged at $839.7 million, suggesting an improvement of 22.2% from the prior-year reported figure.

Meanwhile, the Zacks Consensus Estimate for earnings for the quarter under review has been stable at $2.11 over the past 30 days. The figure indicates growth of 7.7% from the prior-year quarter.

Notably, this extreme-value retailer for tweens and teens has a trailing four-quarter earnings surprise of 46.9%, on average. In the last reported quarter, this Philadelphia, PA-based company’s bottom line surpassed the Zacks Consensus Estimate by a significant margin of 89.5%.

Factors to Note

Five Below’s fourth-quarter performance is likely to have benefited from the company’s digital strategy, expansion of supply chain network, enhancement of overall distribution capabilities and focus on merchandise assortment. The company has been adding more essential households and wellness products at compelling prices.

In spite of a challenging retail backdrop, Five Below posted sturdy holiday sales results that exceeded management’s expectations. The company highlighted that net sales for the holiday Period — from Nov 1, 2020 through Jan 2, 2021 — surged 21.1% to $722.3 million. Markedly, comparable sales for the holiday shopping season rose 10.1%.

Following impressive performance in the festive season, management guided fourth-quarter fiscal 2020 net sales between $835 million and $840 million. This suggests an improvement of 21.5-22.2% from the year-ago period. The company projected comparable sales growth of about 11% and earnings per share to be $2.08-$2.12 for the final quarter.

Clearly, aforementioned factors raise optimism about the outcome of the results. However, margins still remain an area to watch. Impact of costs associated with digital fulfilment and supply chain cannot be ruled out.

Five Below, Inc. Price, Consensus and EPS Surprise

Five Below, Inc. Price, Consensus and EPS Surprise
Five Below, Inc. Price, Consensus and EPS Surprise

Five Below, Inc. price-consensus-eps-surprise-chart | Five Below, Inc. Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Five Below this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Although Five Below carries a Zacks Rank #3, it has an Earnings ESP of -0.21%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Ollie's Bargain Outlet OLLI has an Earnings ESP of +3.73% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Outdoor Brands AOUT has an Earnings ESP of +3.96% and a Zacks Rank #3.

Williams-Sonoma WSM has an Earnings ESP of +1.37% and a Zacks Rank #3.

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