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Five Below: Evaluating the Target Price Changes

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Dec. 7 2018, Updated 9:33 a.m. ET

Target price changes

Since Five Below (FIVE) reported its strong third-quarter results on December 5, there have been two target price changes. On December 6, RBC lowered the target price from $134.00 to $120.00. Credit Suisse slashed the target price by $10.00 to $115.00. Five Below’s mean target price is $128.53, which indicates a 26.3% upside to its price as of December 6. Among the 18 analysts tracking Five Below, ~56.0% recommended a “buy,” while 44.0% recommended a “hold.”

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Third-quarter numbers

Five Below’s third-quarter sales of $312.8 million rose 21.6% year-over-year and beat analysts’ estimate by 2.9%. The EPS was $0.24, which beat the consensus estimate by 26.3%. On a YoY basis, the EPS has risen 33.3%. New store openings remain the primary sales growth driver. In the third quarter, Five Below opened 53 new stores. The company plans to open 125 stores in fiscal 2018.

Five Below increased its fiscal 2018 sales guidance due to good third-quarter results. For fiscal 2018, the sales are expected to be $1.55 billion–$1.56 billion compared to the earlier guidance of $1.53 billion–$1.54 billion.

How analysts view Five Below’s peers

Among the 28 analysts covering Dollar General (DG) stock, 61.0% recommended a “buy,” while 36.0% recommended a “hold.” The 12-month average target price for Dollar General is $116.79, which reflects a 9.5% upside. On December 5, RBC slashed the target price for Dollar General from $128.00 to $122.00. Morgan Stanley slashed the target price to $115.00 to $118.00.

Among the 26 analysts covering Dollar Tree (DLTR) stock, 58.0% recommended a “buy,” while 42.0% recommended a “hold.” The 12-month average target price for Dollar Tree stock is $94.88, which reflects a 10.0% upside. On November 30, Morgan Stanley lowered the target price for Dollar Tree from $95.00 to $90.00. RBC increased the target price to $98.00 from $94.00.

Among the 12 analysts covering Big Lots (BIG) stock, 67.0% recommended a “buy,” while 33% recommended a “hold.” The 12-month average target price for Big Lots is $48.73, which reflects a 20.9% upside.

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