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NEW YORK (TheStreet) -- Five Below (FIVE) - Get Report has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D+.  TheStreet Ratings Team has this to say about their recommendation:

"We rate FIVE BELOW INC (FIVE) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, premium valuation, poor profit margins, weak operating cash flow and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • FIVE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 26.10%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, FIVE is still more expensive than most of the other companies in its industry.
  • The gross profit margin for FIVE BELOW INC is currently lower than what is desirable, coming in at 30.17%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.39% trails that of the industry average.
  • Net operating cash flow has decreased to -$16.24 million or 39.90% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, FIVE BELOW INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • You can view the full analysis from the report here: FIVE Ratings Report