Five Below bounces off trend line ahead of earnings
Discount retailer Five Below (Nasdaq: FIVE) is set to report second quarter earnings results on August 28 and analysts expect the company to earn $0.50 on revenue of $421.16 million. The company earned $0.45 in the same quarter one year ago and the revenue was $347.73 million. This means that if estimates are accurate, earnings will increase by 10% and revenue will increase by 21.1%.
The company has been able to grow earnings by 36% per year over the last three years and sales have grown by an average of 24% per year during that same time period. Sales were up 23% and earnings were up 31.4% in the first quarter. Analysts expect earnings growth of 23% for 2019 as a whole and sales growth of 21.3%.
In addition to the strong earnings and sales growth, Five Below has solid management efficiency measurements. The return on equity is at 26.9% and the profit margin is at 12%. It is also worth mentioning that the company doesn’t have any long-term debt.
From the Tickeron Fundamental Analysis Overview we see that the Tickeron Profit versus Risk Rating for Five Below is 28, indicating low risk on high returns. The average Profit vs. Risk Rating for the industry is 64, placing this stock better than average.
Turning our attention to the technical analysis, we see that the Momentum Indicator exceeded the 0 level on August 16, 2019. Traders may consider buying the ticker or exploring call options. In 59 of 80 cases where the ticker's Momentum Indicator exceeded 0, its price rose further within the subsequent month. The odds of a continued Uptrend are 74%.
The Moving Average Convergence Divergence (MACD) just turned positive. Considering data from situations where FIVE's MACD histogram became positive, in 36 of 51 cases, the price rose further within the following month. The odds of a continued Uptrend are 71%.
We also see that the weekly stochastic readings were recently in oversold territory and have turned higher in the last few weeks, creating a bullish crossover. When the indicators made a bullish crossover in December, the stock gained over 50% in just over four months.
There is also the matter of a trend line that connects the lows from the last few years and the stock just recently hit that trend line.
If there is a concern from a technical perspective, it is the fact that the 50-day moving average just recently crossed below the 200-day moving average and the 13-week moving average is currently making a bearish crossover of the 52-week.
As far as the sentiment toward Five Below, the analysts’ ratings and the short interest ratio are at average levels. There are 21 analysts following the stock with 15 “buy” ratings and six “hold” ratings. This puts the buy percentage at 71.4% and that falls right in the average range between 65% and 75%.
The short interest ratio for Five Below is currently at 2.18 which is slightly below average, but not terribly low. The number of shares sold short jumped by almost 300K from the end of July through the middle of August, but the average daily trading volume jumped from 714K to 1.175 million and that caused the ratio to decline.
Looking back at the last two years of earnings reports, Five Below has beaten earnings estimates in each of the last eight quarters. Even though the company has beaten, the reaction hasn’t always been positive each time. There have been a couple of instances where the stock has gapped higher after reporting earnings.
There are many positives for Five Below heading in to the earnings report, but there are a few negatives as well. The risk/reward relationship seems to be pretty balanced at this time.
FIVE's RSI Oscillator recovers from oversold territory
The RSI Indicator for FIVE moved out of oversold territory on June 02, 2023. This could be a sign that the stock is shifting from a downward trend to an upward trend. Traders may want to buy the stock or call options. The A.I.dvisor looked at 23 similar instances when the indicator left oversold territory. In of the 23 cases the stock moved higher. This puts the odds of a move higher at .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. of 58 cases where FIVE's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where FIVE advanced for three days, in of 331 cases, the price rose further within the following month. The odds of a continued upward trend are .
FIVE may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on May 19, 2023. You may want to consider selling the stock, shorting the stock, or exploring put options on FIVE as a result. In of 83 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for FIVE turned negative on May 19, 2023. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 54 similar instances when the indicator turned negative. In of the 54 cases the stock turned lower in the days that followed. This puts the odds of success at .
FIVE moved below its 50-day moving average on May 19, 2023 date and that indicates a change from an upward trend to a downward trend.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where FIVE declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for FIVE entered a downward trend on May 23, 2023. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Fundamental Analysis (Ratings)
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 77, placing this stock better than average.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. FIVE’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (7.418) is normal, around the industry mean (13.260). P/E Ratio (38.760) is within average values for comparable stocks, (24.930). Projected Growth (PEG Ratio) (1.378) is also within normal values, averaging (2.485). FIVE has a moderately low Dividend Yield (0.000) as compared to the industry average of (0.038). P/S Ratio (3.258) is also within normal values, averaging (69.752).
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Fundamental Analysis Ratings
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General Information
a retaier of clothing and other accessories for teens
Industry SpecialtyStores
FIVE and
Correlation & Price change
A.I.dvisor indicates that over the last year, FIVE has been closely correlated with RH. These tickers have moved in lockstep 69% of the time. This A.I.-generated data suggests there is a high statistical probability that if FIVE jumps, then RH could also see price increases.
| Ticker / NAME | Correlation To FIVE | 1D Price Change % | ||
|---|---|---|---|---|
| FIVE | 100% | +1.30% | ||
| RH - FIVE | 69% Closely correlated | +1.70% | ||
| FND - FIVE | 64% Loosely correlated | -3.24% | ||
| BBY - FIVE | 62% Loosely correlated | -0.52% | ||
| HD - FIVE | 59% Loosely correlated | -0.96% | ||
| CPRT - FIVE | 58% Loosely correlated | +0.56% | ||
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