FIVE: Elevated Expectations Will Likely Expose Fragile Turnaround Momentum

Five Below's analyst price target has been raised from approximately $109 to about $125. Analysts point to improving profit margins, beatable second half and 2026 expectations, and strengthened leadership as drivers of a more favorable long term outlook, despite slightly lower projected revenue growth.

Analyst Commentary

Recent Street research on Five Below has skewed constructive, with several firms citing an improved merchandising strategy, beatable earnings expectations for the second half of the year and into 2026, and ongoing unit growth as key supports for the stock's long term multiple. New leadership appointments in merchandising and finance are also being viewed as a positive step toward stabilizing execution and improving consistency in performance.

JPMorgan's upgrade of Five Below to Overweight, along with price targets in the mid to high $150s and the high $180s from other firms, reflects a view that current valuation leaves room for upside if management can sustain recent momentum and deliver on store expansion and margin recovery. Analysts are particularly focused on the potential for stronger same store sales trends and operating leverage as the company scales.

At the same time, not all of the commentary is unequivocally bullish. Some research highlights that the early stages of the turnaround are still being tested and that recent strength could be influenced by temporary industry dynamics.

Bearish Takeaways

• Bearish analysts caution that a portion of Five Below's recent comparable sales acceleration is tied to one time factors, including tariff driven price actions and competitors' store closures. This raises questions about the durability of current growth trends.
• Some see valuation as demanding relative to historical norms and peers, and argue that the stock already embeds a successful execution of the turnaround. This view suggests there may be limited room for missteps on merchandising, traffic, or store productivity.
• There is concern that early signs of improvement under the new management team may not yet prove a full, sustainable turnaround, which could create execution risk if macro conditions soften or promotional intensity in the value segment increases.
• Bearish analysts also highlight the risk that elevated expectations for second half and 2026 results could become a headwind if Five Below experiences any slowdown in unit growth or margin expansion. This could potentially trigger negative revisions and multiple compression.

What's in the News

• Raised full year fiscal 2025 guidance, now expecting net sales of $4.62 billion to $4.65 billion, comparable sales growth of roughly 9.4% to 10.1%, and diluted EPS of $5.51 to $5.69 on about 55.5 million shares (Corporate Guidance: Raised).
• Issued new fourth quarter fiscal 2025 outlook, calling for net sales of $1.58 billion to $1.61 billion, 6% to 8% comparable sales growth, and diluted EPS of $3.34 to $3.52 on approximately 55.6 million shares (Corporate Guidance: New/Confirmed).
• Announced expansion into the Pacific Northwest with eight new stores opening across Washington and Oregon in November, marking the company’s first entry into that region (Business Expansions).
• Appointed Daniel Sullivan as Chief Financial Officer, effective October 6, 2025, succeeding interim CFO Kenneth Bull and adding a seasoned, two time public company CFO to lead finance, IT, and asset protection (Executive Changes: CFO).
• Updated share repurchase activity, confirming no shares were bought from August 3, 2025 to November 1, 2025 and that the company has completed repurchasing 449,324 shares for $69.46 million under its November 29, 2023 authorization (Buyback Tranche Update).

Valuation Changes

• The fair value estimate has risen moderately, increasing from about $109.31 to approximately $125.06 per share.
• The discount rate has edged higher, moving from roughly 8.80% to about 8.93%, reflecting a slightly higher required return.
• The revenue growth assumption has been reduced modestly, decreasing from around 8.51% to about 7.68% annually.
• The net profit margin has improved meaningfully, rising from approximately 6.09% to about 6.98% in future projections.
• The future P/E multiple has ticked down slightly, easing from about 23.50x to roughly 23.05x forward earnings.