Bernstein raises Five Below stock price target on strong Q2 results
Investment firm Bernstein has increased its price target for Five Below shares on the retailer's impressive second-quarter results. The firm now recommends a price target of $272, up from the previous $250, and maintains an "Outperform" rating. Five Below's stock has gained 61% over the past year, currently trading at $238.54 with a market capitalization of $13.2 billion.
The company reported a solid comparable sales increase of 14.1% in Q2, surpassing its own guidance of 8% to 10% and the consensus estimate of 10.6%. This growth was primarily driven by foot traffic, with low-single-digit contributions from sales like squishy dumplings. Excluding $163.6 million in tariff refunds, the adjusted gross margin reached 35.6%, up 220 basis points and 10 basis points above the consensus of 35.5%.
Improvements in merchandise margin, shrink, and strong leverage helped offset the impact of fuel inflation.
Adjusted earnings per share were $1.68, beating estimates by 30 cents. The company trades at a P/E ratio of 30.4, although its PEG ratio of 0.46 indicates attractive value relative to growth. InvestingPro analysis rates the company's financial health as "Great," and 11 analysts have raised their earnings estimates for the upcoming period. Further analysis is available through InvestingPro's Pro Research Report, covering 8 additional insights and metrics for Five Below and over 1,400 US equities.
Five Below's recent financial performance has received favorable evaluations from multiple analyst firms. The company achieved a 14.1% increase in comparable sales during Q2, exceeding Truist and Telsey's estimates of 13% and 10%, respectively. Adjusted earnings per share reached $1.68, surpassing Telsey's estimate of $1.41 and the FactSet consensus of $1.40.
Analysts from Truist Securities, Mizuho, Guggenheim, and Wells Fargo have also raised their price targets, citing factors such as consistent comparable store sales growth, expanding margins, transaction-led sales, and underlying momentum.
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