Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Dollar General Corp. (DG): Five Below Inc (FIVE) Earnings Will Have a Lot to Live Up To

Five Below Inc (NASDAQ:FIVE) will release its quarterly report on Monday, but investors remain confident in the stock’s prospects for future growth. The question, though, is whether Five Below Inc (NASDAQ:FIVE) earnings can keep growing quickly enough to sustain the current stock price.

Five Below Inc (NASDAQ:FIVE)

Five Below Inc (NASDAQ:FIVE) has done an admirable job of tapping into the retail potential of the teen and preteen segment, with low-priced products appealing even to budget-conscious young shoppers. But with so many teen-oriented retailers having struggled lately, can Five Below keep bucking the trend with strong performance? Let’s take an early look at what’s been happening with Five Below Inc (NASDAQ:FIVE) over the past quarter and what we’re likely to see in its report.

Stats on Five Below

Analyst EPS Estimate $0.09
Change From Year-Ago EPS 125%
Revenue Estimate $112.73 million
Change From Year-Ago Revenue 30%
Earnings Beats in Past 4 Quarters 4

Source: Yahoo! Finance.

How can Five Below earnings surprise investors?
Analysts have gotten just a bit more excited about the prospects for continued Five Below Inc (NASDAQ:FIVE) earnings growth in recent months, having boosted their estimates for the July quarter and the full fiscal year by $0.01 per share. The stock has inched up in response, gaining 3% since early June.

Five Below surprised investors with strong first-quarter results, releasing its quarterly report in June and revealing that the company managed to post same-store sales gains of 4.2%. Combined with new store locations, net revenue rose 33%, and Five Below reversed a year-ago loss to post a profit of $0.05 per share. Even better, Five Below boosted its guidance for the year, increasing its expected sales range by about 1.5%, and adding as much as 5% to earnings expectations.

But Five Below Inc (NASDAQ:FIVE) faced some speed bumps in its stock-price growth when it announced a secondary offering of shares from company insiders. With managers and directors selling a total of 6 million shares, Five Below itself didn’t get anything from the sale, and a hiccup that led to about a week’s delay in the offering led to volatile share-price swings as the stock fell once the offering was priced.

Moreover, Five Below faces strategic threats on two fronts. On one hand, dollar stores Dollar General Corp. (NYSE:DG) and Dollar Tree also carry similarly priced accessories, like bracelets. It wouldn’t be a huge shift for them to aim more toward younger shoppers, and with Dollar General Corp. (NYSE:DG), in particular, seeking a huge expansion in the near future, it could swamp Five Below if it made an effort to cater to the teen and preteen niche. On the other hand, Apollo Global Management LLC (NYSE:APO) is in the process of bringing its Claire’s Stores accessory chain public, and a newly energized Claire’s could make a foray toward making its offerings more attractive from a price standpoint in order to fight back against Five Below.

In the Five Below earnings report, watch to see whether the company can deliver on its aggressive goals for future growth. If the teen and preteen economy falters, then it could spell a big problem for Five Below shareholders going forward.

The article Five Below Earnings Will Have a Lot to Live Up To originally appeared on and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!