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 Stochastic Oscillator descends into oversold zone
The Stochastic Oscillator for FIVE moved into oversold territory on October 23, 2024. Be on the watch for the price uptrend or consolidation in the future. At that time, consider buying the stock or exploring call options.
Technical Analysis (Indicators)
Bullish Trend Analysis
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where FIVE advanced for three days, in of 320 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 252 cases where FIVE Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Bearish Trend Analysis
The 10-day RSI Indicator for FIVE moved out of overbought territory on September 20, 2024. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 28 similar instances where the indicator moved out of overbought territory. In of the 28 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Momentum Indicator moved below the 0 level on October 21, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on FIVE as a result. In of 80 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 September 27, 2024. 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 52 similar instances when the indicator turned negative. In of the 52 cases the stock turned lower in the days that followed. This puts the odds of success at .
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 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 fairly steady price growth. FIVE’s price grows at a lower 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 slightly 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 (6.234) is normal, around the industry mean (12.064). P/E Ratio (33.065) is within average values for comparable stocks, (36.044). Projected Growth (PEG Ratio) (1.138) is also within normal values, averaging (2.650). FIVE has a moderately low Dividend Yield (0.000) as compared to the industry average of (0.034). P/S Ratio (2.796) is also within normal values, averaging (18.679).
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average 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 that the returns do not compensate for the risks. FIVE’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 74, placing this stock worse than average.
Notable companies
Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
a retaier of clothing and other accessories for teens
Industry SpecialtyStores