FBR Capital Reiterates Market Perform Following Five Below (FIVE) 1Q Results
FBR Capital reiterates a Market Perform rating and $36.00 price target on Five Below (NASDAQ: FIVE) following 1Q15 results. FIVE reported an EPS of $0.08 on a 1.7% comp versus the Street at $0.07 on a 1.4% comp. Sales of $153.7 million beat Street estimates of $151.2 million.
Analyst Dutch Fox commented, "On June 3, Five Below reported 1Q15 EPS of $0.08 on a 1.7% comp versus the Street at $0.07 on a 1.4% comp and FBR at $0.06 on a 1.8% comp. Sales of $153.7 million beat Street and FBR estimates of $151.2 million and $151.0 million, respectively. Investors were cautious about 1Q15 results and (particularly) the 2Q15 guide, as evidenced by the extreme volatility heading into the print. However, 20% (9.7 DTC) short interest, combined with a "good enough" quarter/outlook sent shares sharply higher in after-market trading. The longer-term growth story remains very much intact, and to a limited extent, investors will likely give management a pass on the 2H15 comp/earnings growth slowdown. However, we do caution that FIVE will be lapping Frozen in 2H15, and there is some possibility that trends may slow more than anticipated. We are encouraged that March/April sales trends accelerated, and guidance for a 4% to 5% 2Q15 comp (versus 3.3% comp consensus) implies comp trends are at least sequentially flat heading into the important summer months. This quarter further underscores our belief that the fundamental story is extremely appealing and years of growth remain for FIVE; however, shares continue to demonstrate significant volatility and we expect will trade at roughly 29.0x our new FY16 EPS estimates of $1.31. Management is taking the necessary steps to stabilize and grow the business, ultimately leading to a more “investable” stock, but we would like to see further improvement before we fully warm to the name."
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Shares of Five Below closed at $35.10 yesterday.