Why Five Below (FIVE) Stock Is Falling Today
What Happened:
Shares of discount retailer Five Below (NASDAQ:FIVE) fell 15.7% in the morning session after the company reported fourth-quarter results with revenue and EPS slightly missing analysts' estimates, but most importantly, its full-year 2024 revenue and earnings guidance fell short. Investors are likely punishing the stock for its weak outlook.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Five Below? Access our full analysis report here, it's free.
What is the market telling us:
Five Below's shares are somewhat volatile and over the last year have had 7 moves greater than 5%. But moves this big are very rare even for Five Below and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 7 months ago, when the stock dropped 6.2% on the news that the company reported second quarter results that missed analysts' revenue expectations, but earnings per share (EPS) beat. In addition, gross margin increased year on year, which was a positive.
On the other hand, while Five Below's full-year revenue guidance was maintained, it missed analysts' expectations. The company also reduced full year EPS guidance due to an increase in "shrink reserves", and this reduction is likely a major cause of the stock's weakness. Overall, the results could have been better.
Five Below is down 17.1% since the beginning of the year, and at $178.57 per share it is trading 17.8% below its 52-week high of $217.18 from April 2023. Investors who bought $1,000 worth of Five Below's shares 5 years ago would now be looking at an investment worth $1,505.
When a company has more cash than it knows what to do with, buying back its own shares can make a lot of sense–as long as the price is right. Luckily, we’ve found one, a low-priced stock that is gushing free cash flow AND buying back shares. Click here to claim your Special Free Report on a fallen angel growth story that is already recovering from a setback.
