Why are analysts bullish?
As of August 31, Five Below (FIVE) was rated a “buy” by 53% of the 17 analysts covering the stock. That comes ahead of its upcoming fiscal second quarter of 2018 results. Another 47% rated the stock a “hold.”
There have been two changes in price targets for Five Below in the last 30 days. On August 31, UBS upped its price target to $117 from $97. On August 1, JPMorgan raised its price target to $116 from $106. The 12-month average target price for FIVE stock is $105.80, which reflects a 9.2% downside as of August 31.
Analysts are upbeat about Five Below’s fiscal second-quarter results, which are expected to grow 18.1%, while adjusted EPS is expected to rise 26.7%. Sales are likely to benefit from new store openings. The company is also diverting monetary resources toward enhancing brand awareness. Growth in its top line and a reduced tax burden will aid its bottom-line growth. It’s also investing in training personnel to improve the customer’s shopping experience.
Ratings for peers
Of the 29 analysts covering Dollar General (DG), 59% have given it a “buy” rating, and 38% have rated it a “hold.” Analysts’ target price is $113.42, reflecting a 5.3% upside as of August 31.
About 67% of the 27 analysts covering Dollar Tree (DLTR) have given the stock a “buy” rating, and the remaining 33% have rated it a “hold.” The mean target price for Dollar Tree is $98.08, which indicates a 21.8% upside to its price on August 31.
Of the 12 analysts covering Big Lots (BIG), 58% have rated it a “buy,” and the rest have rated it a “hold.” For Big Lots, the mean target price is $46.91, which indicates a ~9% upside.
The one analyst covering Fred’s (FRED) has rated the stock a “hold.” The mean target price for Fred’s is $2, which indicates a ~17% upside.