Factors Likely to Shape Five Below’s (FIVE) Q1 Earnings

Five Below, Inc. FIVE is slated to report first-quarter fiscal 2018 results on Jun 6. In the last reported quarter, the company beat the Zacks Consensus Estimate by a penny. We note that in the trailing four quarters, this Philadelphia, PA-based company has outperformed the Zacks Consensus Estimate by an average of 15.5%. Let’s see how things are shaping up prior to this announcement.

Investors are keeping their fingers crossed and expecting Five Below to continue with its positive earnings surprise streak in the quarter to be reported as well. The Zacks Consensus Estimate for the quarter under review is 32 cents, reflecting a more than two-fold increase from the year-ago period. We observe that the Zacks Consensus Estimate has decreased by a penny in the past 30 days. Analysts polled by Zacks expect revenues of $292.3 million, up approximately 25.5% from the year-ago quarter.

Which Factors Hold Key to Five Below’s Performance?

Five Below remains committed toward expanding its store base, as well as enriching the in-store experience to draw traffic and enhance customer base. The company believes that expanding scale helps it gain access to renowned shopping centers, capitalize on the emerging market trends and increase brand value. In fact, the company’s solid store remodeling is a major reason behind its healthy comps performance.

We believe that Five Below’s wide assortment of trend right merchandise, solid in-store and online experience along with favorable pricing strategy are likely to remain major growth drivers. Further, the company remains focused on cost structure, average net sales per store and supply-chain improvement.

However, stiff competition from both brick-&-mortar and online retailers remain a concern. Moreover, analysts believe that any strategic investments are likely to keep margins under pressure in the short run.

What the Zacks Model Unveils?

Our proven model does not conclusively show that Five Below is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Five Below has a Zacks Rank #4 (Sell) and an Earnings ESP of -4.12%, consequently making the surprise prediction difficult.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

The J. M. Smucker Company SJM has an Earnings ESP of +0.24% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Kroger Co. KR has an Earnings ESP of +2.36% and a Zacks Rank #3.

NIKE, Inc. NKE has an Earnings ESP of +0.52% and a Zacks Rank #3.

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