Five Below Inc (NASDAQ: ) shares jumped 8% after the discount retailer reported better-than-expected third-quarter results and raised its full-year outlook. The company also announced the appointment of a new CEO.
Five Below posted adjusted earnings per share of $0.42 in the 3rd quarter, topping analysts’ estimates of $0.17. Revenue rose 14.6% y/y to $843.7 million, beating the consensus forecast of $796 million. Comparable sales (comps) rose 0.6% in the quarter.
“It’s hard not to be more bullish on FIVE given the magnitude of its compact acceleration in Q3 2024,” Morgan Stanley (NYSE: ), analysts said in a post-earnings note.
“Given FIVE’s historical premium valuation, the multiple has plenty of upside if positive trends are sustained for this good and highly profitable business,” they added, raising their price target on the stock from $100 to $120.
The company raised its full-year 2024 guidance and now expects adjusted earnings per share of $4.78 to $4.96 on revenue of $3.84 billion to $3.87 billion. That forecast beats Wall Street forecasts of $4.61 per share and $3.8 billion in revenue.
“We are pleased to report third quarter results that exceeded our expectations,” said Ken Bull, Interim CEO and Chief Operating Officer. “We delivered stronger performance across a broader group of our product worlds compared to the second quarter and improved our operational execution.”
Five Below opened 82 new stores in the third quarter, ending the period with 1,749 locations in 44 states. This represents an 18.1% increase in the number of stores compared to the same quarter last year.
The company also announced the appointment of Winnie Park as the new Chief Executive Officer effective December 16, 2024.
Looking ahead to Q4, Five Below expects revenue of $1.35 billion to $1.38 billion and adjusted earnings per share of $3.23 to $3.41, assuming a 3-5% decline in comparable sales.
Unlike Morgan Stanley, Bank of America analysts took a more cautious stance on FIVE, citing uncertainty surrounding the company’s sustainable growth.
“We reiterate our ‘underperform’ rating as we see no clear path to sustainable positive earnings and we see margin risk from further deleveraging and potential tariffs,” said analysts led by Melanie Nunes.
Analysts raised their price target on FIVE slightly from $75 to $80.
Senad Karaahmetovic contributed to this report.
