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Five Below (FIVE) Dips More Than Broader Markets: What You Should Know

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Five Below (FIVE - Free Report) closed at $117.59 in the latest trading session, marking a -1.82% move from the prior day. This change lagged the S&P 500's 0.55% loss on the day. Meanwhile, the Dow lost 0.68%, and the Nasdaq, a tech-heavy index, lost 1.16%.

Prior to today's trading, shares of the discount retailer had gained 3.73% over the past month. This has outpaced the Retail-Wholesale sector's loss of 4% and the S&P 500's gain of 0.37% in that time.

Wall Street will be looking for positivity from FIVE as it approaches its next earnings report date. This is expected to be November 29, 2018. The company is expected to report EPS of $0.19, up 5.56% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $304.08 million, up 18.24% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.57 per share and revenue of $1.54 billion, which would represent changes of +43.58% and +20.62%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for FIVE. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 3.28% higher. FIVE is currently sporting a Zacks Rank of #2 (Buy).

In terms of valuation, FIVE is currently trading at a Forward P/E ratio of 46.58. Its industry sports an average Forward P/E of 12.12, so we one might conclude that FIVE is trading at a premium comparatively.

Also, we should mention that FIVE has a PEG ratio of 1.55. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Retail - Miscellaneous industry currently had an average PEG ratio of 1.52 as of yesterday's close.

The Retail - Miscellaneous industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 102, which puts it in the top 40% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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