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Five Below (FIVE) Stock Jumps 7%: Will It Continue to Soar?

·2 min read

Five Below FIVE shares rallied 7% in the last trading session to close at $190.29. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 7.5% loss over the past four weeks.

Shares of Five Below got a boost following the company’s stellar performance in first-quarter fiscal 2021, wherein both the top and bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. Impressively, both the metrics even surpassed pre-pandemic level. Notably, comparable sales increased significantly during the quarter under review.

The company delivered earnings of $0.88 per share that comfortably surpassed the Zacks Consensus Estimate of $0.66. Impressively, the bottom line improved sharply from a loss of $0.91 reported in the first quarter of fiscal 2020 and earnings of $0.46 posted in the first quarter of fiscal 2019.

Net sales of $597.8 million topped the Zacks Consensus Estimate of $556.9 million. The metric surged 197.6% from $200.9 million in the first quarter of fiscal 2020 and 63.9% from $364.8 million in the first quarter of fiscal 2019.

Stronger-than-expected performance prompted management to provide an upbeat view for the second quarter. Five Below envisions second-quarter fiscal 2021 net sales in the range of $640-$660 million. Management forecast second-quarter earnings between $1.01 and $1.13 per share.

This discount retailer is expected to post quarterly earnings of $0.70 per share in its upcoming report, which represents a year-over-year change of +40%. Revenues are expected to be $588.08 million, up 38% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Five Below, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on FIVE going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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