Five Below (FIVE) Stock Price Target Raised at Barclays

NEW YORK (TheStreet) -- Five Below (FIVE) stock price target was increased to $44 from $42 by analysts at Barclays with an "overweight" rating.

In Thursday's early morning trading session, shares of the discount retailer are jumping 7.78% to $37.83.

The analyst action comes after the company reported strong first quarter earnings yesterday. It reported revenue of $153.7 million, or 8 cents per share, compared to revenue of $126 million, or 6 cents per share in the same quarter last year.

The company beat analysts' estimates who expected revenue of $151.3 million, or 7 cents per share, according to those polled by Thomson Reuters.

"We are please with our first quarter results," CEO Joel Anderson said. "Continued strength in new store performance drove the sales and earnings upside versus our guidance, reinforcing our excitement and confidence in the store growth potential for this brand."

While analysts maintain their positive outlook, they said that they are waiting for one key outcome of the company's advertising changes, which will make its stores less dependent on the traffic generated by other retailers during the holidays.

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 and premium valuation."

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

  • The revenue growth came in higher than the industry average of 10.4%. Since the same quarter one year prior, revenues rose by 24.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • FIVE BELOW INC has improved earnings per share by 35.5% 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 two years. 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 $0.88 versus $0.58 in the prior year. This year, the market expects an improvement in earnings ($1.04 versus $0.88).
  • 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. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.80 is somewhat weak and could be cause for future problems.
  • In its most recent trading session, FIVE has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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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