NEW YORK (TheStreet) -- Shares of Five Below Inc. (FIVE) - Get Report are falling by 15.85% to $36.71 in mid-morning trading on Friday, following the company's updated fiscal fourth quarter guidance.

The retailer, which offers merchandise geared toward pre-teen and teen customers all priced $5 and lower, said it is now expecting its earnings results to be in a range of 59 cents to 60 cents per share, on revenue of $262 million to $263 million.

Five Below previously forecast earnings of 59 cents to 62 cents per share, on revenue of $262 million to $266 million for the fiscal 2014 fourth quarter.

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Company CEO and co-founder Thomas Vellios said the company saw a "softness in the business" following Black Friday that continued into December. However, Vellios said that sales "accelerated" as Christmas moved closer.

Additionally, Five Below noted that its net sales for the nine week period that ended on January 3 grew by 24.5% to $230.7 million, from $185.3 million in the comparable 2013 period.

Comparable store sales for the nine week span increased by 3.2% over the same time frame the previous year.

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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, premium valuation and poor profit margins."

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

  • The revenue growth came in higher than the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 24.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FIVE BELOW INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, FIVE BELOW INC increased its bottom line by earning $0.58 versus $0.36 in the prior year. This year, the market expects an improvement in earnings ($0.89 versus $0.58).
  • FIVE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.05 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • 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.
  • FIVE has underperformed the S&P 500 Index, declining 5.49% 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 Ratings Report

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