NEW YORK (TheStreet) -- Five Below (FIVE) - Get Five Below Inc. Report stock is lower by 5.17% to $32.68 in late afternoon trading on Wednesday, after a downgrade to "sell" from "neutral" at Goldman Sachs today.
The firm cut its price target to $30 from $34 on the stock.
Consensus estimates and the stock's valuation are both overvalued, and analysts will likely lower estimates following the company's 2015 fourth quarter results, according to an analyst note, Barron's reports.
Five Below's new store productivity will likely remain weak, while fourth quarter comparable store sales stay soft and selling, general and administrative pressures increase, Goldman Sachs notes, according to Barron's.
Based in Philadelphia, Five Below is a retailer that offers a range of merchandise for teens and pre-teens.
Separately, TheStreet Ratings team rates FIVE BELOW INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate FIVE BELOW INC (FIVE) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and poor profit margins.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- FIVE's revenue growth has slightly outpaced the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 19.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has significantly increased by 61.59% to $27.04 million when compared to the same quarter last year. In addition, FIVE BELOW INC has also vastly surpassed the industry average cash flow growth rate of -10.77%.
- FIVE BELOW INC's earnings per share declined by 13.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FIVE BELOW INC increased its bottom line by earning $0.88 versus $0.58 in the prior year. This year, the market expects an improvement in earnings ($1.04 versus $0.88).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Specialty Retail industry average, but is greater than that of the S&P 500. The net income has decreased by 15.1% when compared to the same quarter one year ago, dropping from $8.32 million to $7.06 million.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, FIVE has underperformed the S&P 500 Index, declining 6.47% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full analysis from the report here: FIVE