Could a discount retailer become the unexpected darling of Wall Street? Five Below, Inc.‘s (NASDAQ:FIVE) latest financial results and strategic moves might just be the revelation investors have been waiting for.
Five Below shares are trading higher on Thursday, a day after the company posted second-quarter revenue of $1.03 billion vs $992.7 million expected and adjusted EPS of 81 cents, beating the Street view of 61 cents.
Five Below expects third-quarter revenue to be in the range of $950 million to $970 million versus Benzinga Pro estimates of $929.91 million.
The firm raised its full-year 2025 revenue guidance from a range of $4.33 billion to $4.42 billion to a new range of $4.44 billion to $4.52 billion, versus estimates of $4.45 billion.
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Telsey Advisory Group analyst Joseph Feldman upgraded Five Below from Market Perform to Outperform, raising the price target from $144 to $170.
Feldman said Five Below's sharper product curation, freshness, and value proposition are resonating with shoppers.
The analyst added that the retailer is spotting and launching new trends, using licensed items and exclusives (such as Stitch Surf Shop), and reinforcing value with back-to-school deals.
He noted that products priced above $5 are still selling well, thanks to placing them in the right categories rather than a separate section and by offering more price points near $5, rather than big jumps to $15 or $25. Looking ahead, Feldman expects Five Below to be a prime destination for Halloween and the holidays.
Feldman said Five Below's momentum stems from value-seeking shoppers in a tough backdrop, tailwinds from the U.S. move to close the de minimis exemption loophole, and a company transformation that streamlines and sharpens its assortment and pricing.
He added that these forces together are underpinning growth despite the challenging environment.
For the third quarter of fiscal 2025, the analyst now expects EPS of 22 cents, up from a loss of two cents.
For full-year 2025, it raises its EPS estimate to $5.10 from $4.72.
FIVE Price Action: Five Below shares were up 3.11% at $148.90 at the time of publication on Thursday, up 50.28% since the start of the year. The stock is trading at a new 52-week high, according to Benzinga Pro data.
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