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After Five Below, Inc.'s (NASDAQ:FIVE) earnings announcement in November 2018, analyst consensus outlook appear cautiously optimistic, as a 33% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 28%. By 2020, we can expect Five Below’s bottom line to reach US$137m, a jump from the current trailing-twelve-month of US$102m. Below is a brief commentary on the longer term outlook the market has for Five Below. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Exciting times ahead?
The view from 19 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of FIVE's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
By 2022, FIVE's earnings should reach US$204m, from current levels of US$102m, resulting in an annual growth rate of 20%. EPS reaches $4.41 in the final year of forecast compared to the current $1.86 EPS today. With a current profit margin of 8.0%, this movement will result in a margin of 8.7% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Five Below, there are three essential factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Five Below 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 Below is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Five Below? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.