Last Update 01 Nov 25

Fair value Increased 1.10%

The analyst price target for Five Below has edged higher from approximately $160.10 to $161.86. This reflects analyst confidence in stronger revenue growth and improving profit margins, supported by positive sales momentum, experienced new leadership, and an accelerating business turnaround.

Analyst Commentary

Recent Street research has reflected a mix of optimism and caution regarding Five Below's outlook. A number of price target increases and rating upgrades indicate confidence in the company's ability to drive growth and deliver stronger results, while others urge a more measured approach as certain risks persist.

Bullish Takeaways

Bullish analysts highlight accelerating business momentum, with notable rebounds in comparable sales (up 7% in Q1 and 12% in Q2), signaling effective turnaround efforts and positive operating trends.
Several price target increases cite improved merchandise assortments and stronger store execution, which are expected to support further revenue growth and margin expansion in the coming quarters.
Recent leadership appointments, particularly in merchandising and finance roles, are viewed as enhancing the company’s ability to navigate strategic shifts and maintain long-term stability.
Unit growth and strong consumer demand for value are considered key drivers of potential earnings outperformance, with some bullish analysts suggesting that current guidance and consensus estimates could be exceeded.

Bearish Takeaways

Bearish analysts warn that much of the recent upside is tied to one-time or external factors, such as tariff-driven price changes, competitor closures, and shifts in import regulation, which may not be sustainable over time.
Despite earnings beats and sales momentum, there is concern about minimal forecasted EPS growth in the next fiscal years, which could limit the potential for further valuation expansion.
Tariff pressures, harder year-over-year comparisons, and diminishing benefits from rival store closures are seen as headwinds that may weigh on profitability through 2026.
Some analysts advise that the risk/reward profile is becoming balanced at current share price levels, pointing to uncertainty around the sustained impact of recent positive developments.

What's in the News

Five Below announced plans to expand into the Pacific Northwest with eight new store openings across Washington and Oregon in November, marking the retailer’s regional debut (Business Expansions).
The Board of Directors appointed Daniel Sullivan as Chief Financial Officer effective October 6, 2025. Sullivan brings over 35 years of finance and operations experience, including roles at Edgewell Personal Care, Party City, and Heineken (Executive Changes, CFO).
Five Below released updated full-year 2025 guidance, projecting net sales of $4.44 billion to $4.52 billion and net income between $253 million and $275 million. This outlook is supported by the opening of approximately 150 net new stores and comparable sales growth of 5% to 7% (Corporate Guidance, Raised).
For the third quarter of fiscal 2025, the company expects net sales between $950 million and $970 million, with anticipated net income of $5 million to $12 million, alongside 50 net new store openings (Corporate Guidance, New/Confirmed).
Five Below completed its latest buyback tranche, repurchasing a total of 449,324 shares for $69.46 million under the program initiated in November 2023 (Buyback Tranche Update).

Valuation Changes

Consensus Analyst Price Target has risen slightly from $160.10 to $161.86, suggesting a moderate upward revision in fair value estimates.
Discount Rate has fallen marginally from 8.73% to 8.64%, reflecting a modest decrease in perceived investment risk.
Revenue Growth expectations have edged higher from 10.18% to 10.22%, indicating slightly increased optimism for future top-line expansion.
Net Profit Margin is up modestly from 6.24% to 6.31%, pointing to incremental anticipated improvement in overall profitability.
Future P/E has declined very slightly from 32.05x to 31.91x, highlighting a small reduction in projected earnings multiple.

Focus on value-driven products, operational simplification, and efficient inventory supports margin expansion and broad-based sales growth amid economic pressures.
Strategic targeting of younger demographics and disciplined store expansion strengthen long-term growth prospects and resilience against external shocks.
Tariffs, rising labor costs, heavy reliance on imports, aggressive expansion, and growing competition threaten both margins and long-term revenue prospects.

Catalysts

About Five Below

Operates as a specialty value retailer in the United States.What are the underlying business or industry changes driving this perspective?

Five Below's commitment to providing extreme value and trend-right products at low price points is driving broad-based transaction growth, especially as consumers across demographics become increasingly value-focused due to persistent economic pressures. This is expanding the store traffic and addressable market, supporting higher revenue and potential sustained comp sales growth.
The company is seeing strong momentum from new and retained younger customers, leveraging social media-driven marketing and relevant assortments, which aligns with generational population growth trends and positions Five Below to capture ongoing demand from Gen Z and younger demographics, underpinning a secular foundation for long-term revenue growth.
Operational simplification strategies-including price point rationalization, SKU rationalization, and improved inventory flow-are driving in-store efficiency, higher conversion, better in-stocks, and lower operational complexity. This should enhance future SG&A leverage and support net margin expansion as store-level productivity improves.
Five Below continues to invest in supply chain agility and inventory positioning, enabling it to weather tariff volatility and global sourcing risks, while also diversifying its vendor and country base. These measures are likely to mitigate margin compression from external shocks and support more stable earnings growth in the longer term.
Ongoing disciplined store expansion, supported by robust new store productivity and a data-driven approach to market selection (particularly in new suburban and secondary markets), ensures a large growth runway in white-space markets. This underpins the potential for consistent, long-term revenue and earnings growth as Five Below moves toward its 3,500+ store target.

Five Below Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Five Below's revenue will grow by 10.6% annually over the next 3 years.
Analysts assume that profit margins will shrink from 6.5% today to 6.2% in 3 years time.
Analysts expect earnings to reach $352.1 million (and earnings per share of $6.43) by about September 2028, up from $273.1 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $313.7 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 31.6x on those 2028 earnings, up from 28.9x today. This future PE is greater than the current PE for the US Specialty Retail industry at 18.7x.
Analysts expect the number of shares outstanding to grow by 0.26% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.79%, as per the Simply Wall St company report.

Five Below Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Five Below faces significant gross margin pressure due to continued tariff-related costs, with recent quarters and future guidance explicitly highlighting unmitigated tariff headwinds; if tariffs remain elevated or increase, it could further compress margins and negatively impact net earnings and profitability.
The company's aggressive expansion strategy (targeting 150+ new stores annually) may lead to market saturation, potential cannibalization of existing sales, and declining new store productivity over time, which would slow long-term revenue growth and put pressure on comparable store sales.
Persistently rising labor expenses and incentive compensation, evidenced by repeated guidance increases for higher SG&A deleverage, could erode net margins, particularly as Five Below is highly dependent on affordable labor to deliver its value proposition in a competitive labor market.
Five Below remains heavily exposed to imported, low-cost discretionary goods; this reliance makes it vulnerable to global supply chain disruptions, regulatory changes, and shifting consumer perceptions toward sustainability, which could impact inventory availability (hurting revenue) and brand appeal (pressuring long-term growth).
Intensifying competition from dollar stores, big-box retailers, and fast-growing e-commerce platforms threatens Five Below's market share and pricing power; these competitive pressures could drive down average unit retail, compress gross margin further, and cap future revenue and earnings growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $157.105 for Five Below based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $185.0, and the most bearish reporting a price target of just $90.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $5.7 billion, earnings will come to $352.1 million, and it would be trading on a PE ratio of 31.6x, assuming you use a discount rate of 8.8%.
Given the current share price of $142.96, the analyst price target of $157.11 is 9.0% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

FIVE: New Leadership And Store Expansion Will Shape Business Turnaround Ahead