Five Below (FIVE) is ~6% higher premarket after the company beat fourth quarter expectations that had been tempered back in January and guided first quarter and fiscal 2018 in-line with Wall Street estimates.
Five Below is a specialty value retailer offering a broad range of merchandise targeted at the teen and pre-teen customer, all priced at $5 and below.
The unique value proposition seems to be a breath of fresh air in a retail sector that had a tough holiday season.
Comparable store sales increased 1% during the fourth quarter. Sales increased 19% to $388 million while earnings per share rose 17% to $0.90. To be fair, FIVE lowered Q4 guidance to EPS of $0.88-0.89 on revenue of $386-388 million from EPS of $0.89-0.92 on revenue of $391-397 million in January.
Five Below isn't immune to the soft traffic across the retail sector, but same store sales were slightly positive and the company is expanding its footprint rather aggressively.
The company has ~500 stores across the US and plans to open 100 more this year. Five Below expects low single digit comparable store sales growth for the year, as well. That sets up a growth story that has become somewhat scarce in a retail industry that has been hampered by ecommerce.
At $40/share, FIVE has a ~$2.2 billion market cap and trades at ~25x earnings with an enterprise value ~12x EBITDA estimates for this year.
The stock may find some resistance in the $40-41 range; roughly 16% of the float is sold short.