A month has gone by since the last earnings report for Five Below (FIVE). Shares have lost about 4.3% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Five Below due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Five Below Q4 Earnings Top Estimates, Comps Rise Y/Y
Five Below reported impressive fourth-quarter fiscal 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Also, net sales and earnings increased year over year, supported by strong comparable sales growth driven by gains in both traffic and average ticket.
More on Five Below’s Q4 Results
FIVE posted adjusted earnings per share of $4.31 in the fiscal fourth quarter, which beat the Zacks Consensus Estimate of $3.99. Also, the figure surged 23.9% from $3.48 in the year-ago quarter.
Net sales of $1.73 billion increased 24.3% year over year. Also, this metric surpassed the Zacks Consensus Estimate of $1.69 billion.
Comparable sales (comps) increased 15.4% year over year, driven by an 8% increase in comparable ticket size and a 7% rise in comparable transactions.
Insight Into Margins & Costs of FIVE
Adjusted gross profit grew 23.8% year over year to $697.4 million. We note that the adjusted gross margin decreased approximately 20 basis points (bps) year over year to 40.3%. This decrease was primarily due to temporary tariff costs of 160 basis points, largely offset by fixed cost leverage from strong comparable sales and improved shrink performance. Regarding shrink, results from the physical inventory counts conducted in January were finalized and reconciled across all stores, providing a total year-over-year benefit of 50 basis points.
Selling, general and administrative (SG&A) costs rose 26.2% to $337.1 million. SG&A costs, as a percentage of net sales, increased approximately 30 bps to 19.5%.
Adjusted operating income was $312.7 million, up 23.4% year over year. The adjusted operating margin decreased approximately 10 bps to 18.1%.
Five Below’s Financial Snapshot: Cash & Equity Overview
The company ended fiscal 2025 with cash and cash equivalents of $723.7 million and short-term investment securities of $208.5 million. Total shareholders’ equity was $2.19 billion as of Jan. 31, 2026.
At the end of fiscal 2025, inventory totaled roughly $847 million, up 28% from last year, alongside an 18% increase in units. This growth reflects both the higher store count and the impact of tariffs on average unit costs. Average units per store rose about 9% at the end of fiscal 2025, driven by inventory pull-forward and the company’s focus on maintaining higher in-stock positions to support growth objectives.
Capital expenditures, excluding tenant allowances, were approximately $175 million, or 3.7% of net sales. This included 115 net new store openings, along with investments in technology and infrastructure. Five Below continues to allocate capital toward initiatives that deliver the highest returns. The company generated strong free cash flow and plans to continue prioritizing working capital reduction in fiscal 2026 as it navigates the impact of tariffs.
FIVE Provides Q4 Store Update
The company opened 14 net new stores and ended the quarter with 1,921 stores across 46 states. This represents an 8.5% increase in the number of stores from the end of the fourth quarter of fiscal 2024. The company plans to open 150 stores by the end of fiscal 2026, taking the total count to 2,071 stores.
What Lies in Q1 for Five Below?
For the fiscal first quarter, Five Below expects total sales in the range of $1.18 billion to $1.2 billion, representing 23% growth at the midpoint compared with the prior-year quarter, with comparable sales growth of 14% to 16%. This quarter is expected to be the company’s highest comping quarter of the year, partially driven by the unannounced benefits of the rounded price simplification strategy implemented last year. Approximately 45 net new stores are anticipated to open across 24 states.
Gross margin in the fiscal first quarter is expected to benefit from fixed cost leverage on strong comparable sales, higher merchandise margins from the net benefit of pricing and lower shrink. Adjusted operating margin at the midpoint is projected to be 9.7%, up from 6.1% in the fiscal first quarter of last year, with the majority of the 360-basis-point increase driven by gross margin expansion and, to a lesser extent, leverage over SG&A expenses.
Net income is expected to fall between $86 million and $93 million, while adjusted net income is projected between $88 million and $94 million. Earnings per share are expected to be between $1.55 and $1.67. Adjusted earnings per share are forecasted to be in the range of $1.57 to $1.69. This outlook reflects the expected impact of tariffs in effect at the start of the fiscal year and does not account for any potential effects from share repurchases.
Five Below’s FY26 Outlook
For fiscal 2026, Five Below expects total sales for the year to be in the range of $5.2 billion to $5.3 billion, representing 10% growth at the midpoint. Comparable sales growth is projected between 3% and 5%, or approximately 17% on a two-year stack basis at the midpoint. Adjusted operating margin at the midpoint is anticipated to increase 100 basis points to 10.9%, driven by gross margin expansion, net of higher marketing investments.
Net income is projected to be between $429 million and $457 million, with adjusted net income anticipated in the range of $431 million to $459 million. Earnings per share are expected to fall between $7.69 and $8.20 and adjusted earnings per share are expected between $7.74 and $8.25. Capital expenditures are projected between $230 million and $250 million, excluding tenant allowances, supporting roughly 150 net new store openings and additional investments in technology and infrastructure.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 83.19% due to these changes.
VGM Scores
Currently, Five Below has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock has a score of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Five Below has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Five Below belongs to the Zacks Retail - Miscellaneous industry. Another stock from the same industry, Dick's Sporting Goods (DKS), has gained 12.9% over the past month. More than a month has passed since the company reported results for the quarter ended January 2026.
Dick's reported revenues of $6.23 billion in the last reported quarter, representing a year-over-year change of +59.9%. EPS of $4.05 for the same period compares with $3.62 a year ago.
For the current quarter, Dick's is expected to post earnings of $2.93 per share, indicating a change of -13.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Dick's. Also, the stock has a VGM Score of A.
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Five Below, Inc. (FIVE): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).