Five Below, Inc. (NASDAQ:FIVE) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of FIVE, it is a financially-sound company with a strong history and a excellent future outlook. In the following section, I expand a bit more on these key aspects. For those interested in digger a bit deeper into my commentary, read the full report on Five Below here.
Flawless balance sheet with solid track record
Investors in search of impressive top-line expansion should look no further than FIVE, with its expected 51% revenue growth in the upcoming year. This is expected to flow down into an impressive return on equity of 22% over the next couple of years. Over the past year, FIVE has grown its earnings by 49%, with its most recent figure exceeding its annual average over the past five years. The strong earnings growth is reflected in impressive double-digit 24% return to shareholders, which is what investors like to see!
FIVE’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This implies that FIVE manages its cash and cost levels well, which is an important determinant of the company’s health. Looking at FIVE’s capital structure, the company has no debt on its balance sheet. This implies that the company is running its operations purely on off equity funding. which is rather impressive for a US$6.8b market cap company. Therefore the company has plenty of headroom to grow, and the ability to raise debt should it need to in the future.
For Five Below, there are three essential factors you should look at:
- Valuation: What is FIVE worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FIVE is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does FIVE return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from FIVE as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of FIVE? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.