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Five Below's (FIVE) Q2 Earnings in Focus: Factors to Note

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Five Below, Inc. (FIVE - Free Report) is likely to register an increase in the top line when it reports second-quarter fiscal 2021 results on Sep 1, after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $658.2 million, suggesting an improvement of 54.5% from the prior-year reported figure.

Meanwhile, the Zacks Consensus Estimate for second-quarter earnings per share has been stable at $1.11 over the past 30 days. The figure indicates a sharp increase from earnings of 53 cents (including benefit of 3 cents from share-based accounting) reported in the prior-year quarter.

Notably, the bottom line of this extreme-value retailer for tweens, teens and beyond has surpassed the Zacks Consensus Estimate by a margin of 33.3% in the last reported quarter.

Factors to Note

Five Below’s second-quarter performance is likely to have benefited from its focus on providing trend-right products, strengthening digital capabilities and delivering better WOW products. The company has been enhancing in-store experience to draw traffic and enhance customer base.

Without doubt, the company’s favorable pricing strategy, and commitment toward improvising merchandise assortment and achieving efficient cost structure have been commendable.

On its last earnings call, management guided net sales in the range of $640-$660 million for second-quarter fiscal 2021, which suggests an increase from $426.1 million in the year-ago period. It also projected earnings between $1.01 and $1.13 per share for the quarter under discussion.

Clearly, aforementioned factors raise optimism about the outcome of the results. However, margins still remain an area to watch. Impact of costs associated with digital fulfilment and supply chain cannot be ruled out. The company is navigating through a tight supply chain environment across the retail landscape, resulting in higher inbound freight costs.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Five Below this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Five Below has an Earnings ESP of 0.00% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Signet Jewelers (SIG - Free Report) has an Earnings ESP of +2.28% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Eagle Outfitters (AEO - Free Report) has an Earnings ESP of +0.66% and a Zacks Rank #3.

Costco (COST - Free Report) has an Earnings ESP of +0.44% and a Zacks Rank #3.