Five Below (FIVE) Rides High on Strategies: Time to Hold?
Five Below, Inc. FIVE seems well poised for growth, thanks to its robust business strategies. FIVE’s focus on providing trend-right products, improving supply-chain operations, strengthening digital capabilities and remodelling stores are yielding solid results. Also, FIVE remains committed to enhancing customer experience in several ways. Apparently, shares of this value chain retailer have surged a whopping 57% over the past six months, outperforming the industry’s 21.6% growth.
Additionally, analysts seem pretty optimistic about the stock. For fiscal 2023, the Zacks Consensus Estimate for Five Below’s sales and earnings per share (EPS) is currently pegged at $3.59 billion and $5.65 each. These estimates suggest growth of 17.7% and 22%, respectively, from the year-ago period’s corresponding figures. Also, for the current fiscal year, the consensus estimate for sales presently stands at $3.05 billion, indicating an increase of 7.2% from the prior-year reported figure.
The Zacks Consensus Estimate for earnings per share of $4.63 for fiscal 2023 and $5.65 for fiscal 2024 suggests growth of 4.3% and 2.5%, respectively.
Let’s Delve Deeper
Five Below has been focusing on enhancing merchandise assortment, improving supply-chain network, strengthening digital capabilities as well as delivering better WOW products, including the Five Beyond offering. The company has added assisted checkout (or ACO) capabilities and is committed to providing same-day delivery service to make shopping convenient.
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The company has been digitizing vendor transactions, implementing a core merchandising platform and applying cloud-based data and analytics to analyze demand and accordingly manage inventory. Five Below rolled out curbside pickup, launched its app and accelerated the buy online, pick up in store business model. Markedly, the company extended its partnership with Instacart to bring expedited same-day delivery to all its outlets. The addition of Venmo and PayPal as payment options also enriches the customer experience.
Additionally, Five Below’s primary focus on teens and pre-teens helps the company enhance its customer base by attracting shoppers. The company is known for its impressive range of merchandise and is committed to making innovations and refreshing its product range per the evolving consumer trends. It is also focused on digital advertising.
Furthermore, Five Below’s pricing strategy of selling products for $5 or below enables it to cater to demographic shoppers, alongside resonating with value-seeking customers. Moreover, the company continues to build new prototypes of Five Beyond.
Five Below’s store-expansion efforts also seem encouraging. It is focused on enriching customer experience as well as enhancing the in-store experience to draw traffic and drive sales. The company believes that expanding scale helps it gain access to renowned shopping centers, capitalize on emerging market trends and increase brand value. During fiscal 2021, Five Below opened 171 stores and remodeled 45 outlets. There is a tremendous opportunity to expand the store fleet throughout the United States to more than 3,500 locations by fiscal 2030.
Wrapping up, FIVE’s business model, digital endeavors, pricing strategy, store-growth opportunities, and strength in the Five Beyond section will continue to drive momentum on the bourses. A long-term expected earnings growth rate of 19% further demonstrates the potential for this Zacks Rank #3 (Hold) stock.
Solid Picks in Retail
We highlighted three better-ranked stocks, namely Tecnoglass TGLS, Wingstop WING and Capri Holdings CPRI.
Tecnoglass manufactures and sells architectural glass and windows, and aluminum products for the residential and commercial construction industries. TGLS currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Tecnoglass’ next financial-year sales and EPS suggests growth of 111.2% and 9%, respectively, from the year-ago reported figures. TGLS has a trailing four-quarter earnings surprise of 26.9%, on average.
Wingstop, which franchises and operates restaurants, currently holds a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 5.8%, on average.
The Zacks Consensus Estimate for Wingstop’s next financial-year sales and EPS suggests growth of 18.4% and 16.1%, respectively, from the year-ago reported numbers. WING has an expected EPS growth rate of 12% for three-five years.
Capri Holdings, a global fashion luxury group of iconic brands like Versace, Jimmy Choo and Michael Kors, carries a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for Capri Holdings’ current financial-year sales and EPS suggests growth of 0.9% and 10.6%, respectively, from the corresponding year-ago tallies. CPRI has a trailing four-quarter earnings surprise of 21%, on average.
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Five Below, Inc. (FIVE) : Free Stock Analysis Report
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Capri Holdings Limited (CPRI) : Free Stock Analysis Report
