FIVE Stock Study (10-13-25)

Posted by Mark on November 29, 2024 at 07:28 | Last modified: October 14, 2025 09:10

I recently did a stock study on Five Below, Inc. (FIVE) $138.49. Previous studies are here, here, and here.

M* writes:

     > Five Below Inc is a specialty value retailer offering merchandise targeted
     > at the tween and teen demographic. The Company’s edited assortment of
     > products includes select brands and licensed merchandise.

Over the past decade, this medium-size company has grown sales and earnings at annualized rates of 19.2% and 19.6%, respectively. Lines are mostly up, straight, and parallel except for EPS dips in ’21, ’23, and ’25 [FY ends Jan 31; references to year at BI and Value Line (VL) incremented to align]. Five- (10-) year EPS R^2 is 0.46 (0.86) and VL gives an Earnings Predictability score of 60.

Over the past decade, PTPM leads peer/industry averages while ranging from 7.8% in ’21 to 12.9% in ’22 with a last-5-year mean of 10.4%. ROE leads peer/industry averages despite falling from 28.7% (’16) to 15.7% (’25) with a last-5-year mean of 25.0%. Debt-to-Capital is less than peer/industry averages with a last-5-year mean of 53.3% (no long-term debt per VL).

Quick Ratio is 0.73 and Interest Coverage is N/A (consistent with no long-term debt) per M* who gives a Financial Health grade of C (per BI website) and assigns no Economic Moat. VL grades the company B++ for Financial Strength.

With regard to sales growth:

• YF projects YOY 16.2% and 9.8% for ’26 and ’27, respectively (based on 22 analysts).
• Zacks projects YOY 15.8% and 9.7% for ’26 and ’27, respectively (7 analysts).
• VL projects 10.9% annualized growth from ’25-’30.
• CFRA projects 15.6% YOY and 12.9% per year for ’26 and ’25-’27, respectively.
• M* provides 2-year annualized ACE of 12.6%.

My 9.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch projects 7.0% and 9.4% per year for ’25-’27 and ’25-’28, respectively (based on 25 analysts).
• Nasdaq.com projects 8.6% YOY and 10.1% per year for ’27 and ’26-’28 (8, 8, and 4 analysts for ’26, ’27, and ’28).
• Seeking Alpha projects 4-year annualized growth of 9.0%.
• Finviz projects 5-year annualized growth of 8.7% (3).
• LSEG projects LTG of 1.9%.
• SERR projects 4-year annualized growth of 1.9% (1; I remain on alert to determine whether this is LSEG duplicate).
• YF projects YOY 1.4% and 10.0% for ’26 and ’27, respectively (22).
• Zacks projects YOY 0.4% contraction and 8.6% growth for ’26 and ’27 (8) and 5-year growth of 13.6%/year.
• VL projects 6.3% annualized growth from ’25-’30.
• CFRA projects growth of 0.4% YOY and 5.1% per year for ’26 and ’25-’27, respectively.

My 2.0% forecast is below the long-term-estimate range (mean of six is 6.9%, but in case of duplicate mean of five is 8.3%). I will use ’25 EPS of $4.60/share as the initial value rather than 2026 Q2 $4.94 (annualized).

My Forecast High P/E is 39.0. Over the past 10 years, high P/E increases from 39.5 (’16) to 46.1 (’25) with a last-5-year mean of 44.2 (excluding 89.8 in ’21) and last-5-year-mean average P/E of 33.7. I am below the range.

My Forecast Low P/E is 20.0. Over the past 10 years, low P/E decreases from 25.7 (’16) to 14.1 (’25) with a last-5-year-mean of 23.3. I am forecasting toward bottom of the range (only ’25 is less).

My Low Stock Price Forecast (LSPF) of $92.00 is default based on initial value from above. This is 33.6% less than the previous close but 75.6% greater than the 52-week low.

These inputs land FIVE in the HOLD zone with a U/D ratio of 1.3. Total Annualized Return (TAR) is 7.4%.

PAR (using Forecast Average—not High—P/E) of 1.6% is less than the current risk-free rate (T-bills). If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR instead (still less than I seek for a medium-size company).

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 42 studies (my study and 7 outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 10.5%, 8.3%, 30.0, and 21.1, respectively. I am much higher on Forecast High P/E but lower on the others. VL’s projected average annual P/E of 30.0 is higher than MS (25.6) and mine (29.5).

MS high / low EPS are $7.29 / $4.77 versus my $5.08 / $4.60 (per share). My high EPS is lower due to a lower forecast growth rate. VL’s high EPS is in the middle at $6.25.

MS LSPF of $87.70 implies a Forecast Low P/E of 18.4: less than the above-stated 21.1. MS LSPF is 12.9% less than the default $4.77/share * 21.1 = $100.65, which results in more conservative zoning. MS LSPF is also 4.7% less than mine.

With regard to valuation, PEG is 2.0 and 13.7 (low growth rate) per Zacks and my projected P/E, respectively: both overvalued (M* has 1.2: fairly valued). Relative Value [(current P/E) / 5-year-mean average P/E] is slightly low at 0.83.

MOS is moderate because my inputs are near or below respective analyst/historical ranges and MS averages with one glaring exception. This is supported by an MS TAR 1.8% per year greater than my 9.2%.

The glaring exception is MS Forecast High P/E. Eleven studies (almost 25% of the total) use numbers in the 20s with four being 22.5 – 25.0. With the lowest value in 10 years being 39.5 and a last-10-year mean Forecast LOW P/E of 24.0, I think these MS numbers are unreasonably low.

Per U/D, FIVE is a BUY under $118/share. Given forecast high price ~$198, the BI TAR criterion [double in five years] is met ~$99 (no dividend).

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