Stock (Symbol) |
Five Below (FIVE) |
Stock Price |
$45 |
Sector |
| Retail & Travel |
Data is as of |
| April 13, 2017 |
Expected to Report |
| May 31 |
Company Description |
 Five Below, Inc. (Five Below) is a specialty retailer offering a range of merchandise for teen and pre-teen customer. FIVE offers a range of products, all priced at five dollars and below, including select brands and licensed merchandise across a range of categories, including Style, Room, Sports, Tech, Crafts, Party, Candy and Now. FIVE operates 366 locations across 21 states. The Company’s stores have over 4,000 stock-keeping units (SKUs) across a range of categories. The Company’s product groups include leisure, fashion and home, and party and snack. Leisure includes items, such as sporting goods, games, toys, tech, books, electronic accessories, and arts and crafts. Fashion and home includes items, such as personal accessories, ‘attitude’ t-shirts, beauty offerings, home goods and storage options. Party and snack includes items, such as party and seasonal goods, greeting cards, candy and other snacks, & beverages. Source: Thomson Financial |
Sharek’s Take |
 Five Below (FIVE) is a dollar store for kids and teenagers. The company sells merchandise such as toys, games, party items, sports gear, clothes, candy & electronics for between $1 and $5 each. This is one of the last great expansion stories in the dollar chain field, as growth opportunity for Five Below is still vast. During the past three years Five Below has grown its store count from 366 to 437 and 522, which is 19% per year. In 2017 the company is on pace to open 100 more locations with a long-term goal of 2000 nationwide. So if the store count goes up four-fold, what will that do for the stock? New stores are approximately 8000 sq ft, cost $300,000 in cash to open, deliver sales of $1.6 million in the first year and payback the initial investment in less than one year. Management sees sales growth of 20% a year through 2020, and analysts have an Estimated Long- Term Growth Rate of 21% per year on the stock. In my opinion, profits could compound 25% a year. Five Below has a nice niche in the retail space. Long-term the store count should expand four-fold and I believe the stock will as well. Eventually I believe FIVE will be acquired by a bigger dollar store chain. |
One Year Chart |
 Last qtr FIVE grew profits 17% as sales increased 19% with a 1% rise in same store sales. The company beat the street by a penny, and has either beat by a penny or met estimates the past three qtrs. 2017 estimates haven’t moved much the past 4 qtrs. Since FIVE isn’t upping estimates or beating the street by much, the stock isn’t very timely. Profit growth Estimates for the next 4 qtrs are 8%, 17%, 20% and 23%. The P/E of 28 is reasonable for 21% grower. |
Fair Value |
 During the last six qtrs Five Below’s P/E has gone from 26, 30, 39, 31 and now 28. My Fair Value is a P/E of 32, which is $51 a share this year and $61 next year. |
Bottom Line |
 Five Below is one retailer that’s not getting hurt by the trend of people buying more on Internet. Many of the items FIVE sells kids aren’t even aware of until they visit the stores. There’s a 5-10 year opportunity to increase the store could four-fold and profits could go up even more, with the ultimate finish being a buyout by a larger dollar store. FIVE ranks 24th of 31 stocks in the Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
24 of 31Aggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
