FIVE Stock Study (10-14-26)

Posted by Mark on October 12, 2026 at 06:55 | Last modified: October 14, 2026 12:08

I recently did a stock study on Five Below, Inc. (FIVE, $213.35). Previous studies are here, here, here, and here.

M* writes:

     > Five Below Inc. is a specialty value retailer offering a broad
     > range of trend-right, high-quality products loved by the kid and
     > the kid in all of customers. The Company’s edited assortment
     > of products includes select brands and licensed merchandise.
     > The Company also sells its merchandise on the internet, through
     > the Company’s e-commerce website and mobile app, offering
     > home delivery and the option to buy online and pick up in store.
     > Additionally, the Company sells merchandise through on-demand
     > third-party delivery services to enable its customers to shop
     > online and receive convenient delivery. It derives revenue
     > from sales of the Company’s merchandise to customers.

Over the past decade, this medium-size company has grown sales and EPS at annualized rates of 18.4% and 17.4%, respectively [FY ends Jan 31; calendar year from BI website and Value Line (VL) incremented by one to match]. Lines are mostly up, straight, and parallel except for EPS dips in ’21, ’23, and ’25. Five- (10-) year EPS R^2 is 0.34 (0.84), and VL gives an Earnings Predictability score of 60. Shares outstanding increase 14.1% (1.5% per year).

Over the past decade, PTPM leads peer and industry averages while ranging from 7.8% in ’21 to 12.9% in ’22 with a last-5-year mean of 10.8%. ROE leads peer averages and is roughly equal to the industry while falling from 25.7% (’17) to 18.3% (’26) with a last-5-year mean of 20.8% (shareholder equity consistently positive and increasing 23.4%/year). Debt-to-Capital is less than peer and industry averages with a last-5-year mean of 51.8% (operating leases for over 1,900 stores).

Quick ratio is 1.19 and interest coverage N/A per M* who assigns “Narrow” Economic Moat and a B trade for Financial Health (per BI website). VL gives a B++ rating for Financial Strength and reports no long-term debt.

RightStock—a new tool on the BI website that I am tracking for informational purposes—gives a fitness score of 73 (“moderate,” citing weak ROE with a 5-year average of 20.9%?) and opportunity score of 88 (“excellent”).

With regard to sales growth:

• YF gives YOY ACE 19.8% and 9.2% for ’27 and ’28, respectively (based on 24 analysts).
• Zacks gives YOY ACE 20.1% and 9.0% for ’27 and ’28, respectively (7 analysts).
• VL projects 10.1% per year from ’26-’31.
• CFRA projects 19.6% YOY and 14.7% per year for ’27 and ’26-’28, respectively.

My 9.0% forecast is at bottom of the range.

With regard to EPS growth:

• MarketWatch gives ACE 31.8% and 25.4% per year for ’26-’28 and ’26-’29 (based on 29 analysts).
• Nasdaq.com gives ACE 6.5% YOY and 10.9% per year for ’28 and ’27-’29 (9 / 9 / 4 analysts for ’27 / ’28 / ’29).
• Seeking Alpha projects 4-year annualized growth of 24.6%.
• Finviz gives 5-year annualized ACE of 23.5% (3).
• LSEG has LTG at 19.0%.
• YF gives YOY ACE of 53.6% and 7.9% for ’27 and ’28, respectively (24).
• Zacks gives YOY ACE 57.5% and 6.4% for ’27 and ’28 along with 5-year annualized 24.7% (9).
• VL projects 16.0% per year from ’26-’31.
• CFRA projects 53.7% YOY and 28.4% per year for ’27 and ’26-’28, respectively.

My 14.0% forecast is below the long-term-estimate range (mean of five: 21.6%). Initial value is ’26 EPS of $6.47/share rather than 2026 Q2 $11.14 (TTM).

My Forecast High P/E is 31.0. Over the past 10 years, high P/E ranges from 31.7 in ’26 to 51.2 in ’19 (excluding upside outlier of 89.8 in ’21) with last-5-year mean of 41.7 and a last-5-year-mean average P/E of 31.1. I am below the range.

My Forecast Low P/E is 19.0. Over the past 10 years, low P/E falls from 24.6 to 8.1 (’26) with a last-5-year mean of 20.6. I am forecasting below the 10-year median of 23.0 (only ’26 and 14.1 in ’25 are less).

My Low Stock Price Forecast (LSPF) of $122.90 is default based on initial value from above: 57.5% less than previous close and 36.6% less than the 52-week low (unreasonable? See discussion below).

These inputs land FIVE in the HOLD zone with a U/D ratio of 1.9. Total Annualized Return (TAR) is 12.6%.

PAR (using Forecast Average—not High—P/E) of 7.9% is less than I seek for a medium-size company. If a solid margin of safety (MOS) backs this study, then I can proceed based on TAR instead.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on 44 studies done in the past 90 days (my study and 16 outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 12.0%, 11.7%, 31.5, and 19.9, respectively. I am higher on EPS growth but lower otherwise. VL projects a future average P/E of 20.0 that is less than MS (25.7) and less than mine (25.0).

MS high / low EPS are $14.91 / $7.92 versus my $12.46 / $6.47 (per share). My high EPS is less due to a lower initial value. VL high EPS of $14.00 is in the middle.

MS LSPF of $150.00 implies a Forecast Low P/E of 18.9: less than the above-stated 19.9. MS LSPF is 4.8% less than the default $7.92/share * 19.9 = $157.61 resulting in more conservative zoning. MS LSPF is 20.0% greater than mine, however.

MOS is strong in the study because my inputs are near or below most historical/analyst/MS estimates and ranges. Supporting the MOS is MS TAR exceeding mine by 5.5% per year and my lower LSPF.

With regard to valuation, PEG is 0.82 and 1.2 per Zacks and my projected P/E, respectively: fairly valued (0.99 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is quite low at 0.62. “Quick and dirty” cash flow has stock undervalued by 30%. M* reports stock fairly valued.

It almost seems like a split decision on this stock. My SSG has FIVE only 13% above the buy point because assigning a LSPF substantially less than the 52-week low seems unreasonable to me. The stock has rallied more than 40% over the past year, which usually leaves me far from a buy point. Also, while our methodology provides options to select an alternative [higher] LSPF, that implies a change in Forecast Low P/E even though the latter stays hidden.

In a highly questionable turn of events, VL has a lower forecast high price ($335) than I do. I could just punt and say per BI TAR criterion, the buy point is $335 / 2 ~ $167/share.

Per my SSG, FIVE is a U/D BUY under $188 share. Given forecast high price ~$386, [386.3 / ((14.87 / 100 ) +1 ) ^ 5] ~ $193 meets the BetterInvesting® TAR criterion.

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