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Five Below (FIVE) Lined Up for Q3 Earnings: What's in Store?

Five Below, Inc. FIVE is likely to register a marginal increase in the top line when it reports third-quarter fiscal 2022 results on Nov 30 after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $611.2 million, suggesting a slight improvement of 0.6% from the prior-year reported figure.

The Zacks Consensus Estimate for third-quarter earnings per share has been stable at 14 cents over the past seven days. The figure indicates a decline of 67.4% from the prior-year quarter.

This extreme-value retailer for tweens, teens and beyond has a trailing four-quarter earnings surprise of 11.6%, on average. In the last reported quarter, the company’s bottom line missed the Zacks Consensus Estimate by a margin of 3.9%.

Five Below, Inc. Price, Consensus and EPS Surprise

Five Below, Inc. price-consensus-eps-surprise-chart | Five Below, Inc. Quote

Factors to Note

The third quarter of fiscal 2022 might have been soft for Five Below, at least consensus numbers say so. A competitive landscape, sluggish consumer demand and higher shipping costs might have hurt the company’s performance. Also, a promotional environment might have been an added deterrent.

On its last earnings call, Five Below guided third-quarter comparable sales to decline in the bracket of 7%-9% against an increase of 14.8% registered in the year-ago period.

We believe that the increased freight cost, higher wages and elevated marketing expenses are likely to have put pressure on margins and, in turn, the bottom line. Five Below estimated a contraction of about 540 basis points in the third-quarter operating margin due to the deleveraging of fixed expenses on the negative comp, higher store expenses and increased marketing expenses.

Management projected earnings between 8 cents and 19 cents per share. This suggests a decline from the earnings of 43 cents reported in the prior-year period.

Nonetheless, Five Below’s focus on providing trend-right products and strengthening digital capabilities and the increased penetration of Five Beyond products are likely to have provided some cushion.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Five Below this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Five Below has a Zacks Rank #3 and an Earnings ESP of +10.31%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks With the Favorable Combination

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

Dollar General DG currently has an Earnings ESP of +1.58% and a Zacks Rank of 2. The company is likely to register an increase in the bottom line when it reports third-quarter fiscal 2022 results. The Zacks Consensus Estimate for the quarterly earnings per share of $2.55 suggests an increase of 22.6% from the year-ago quarter.

Dollar General’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $9.43 billion, which suggests a rise of 10.7% from the figure reported in the prior-year quarter. DG delivered an earnings beat of 2.2%, on average, in the trailing four quarters.

Kroger KR currently has an Earnings ESP of +1.95% and a Zacks Rank #3. The company is likely to register an increase in the bottom line when it reports third-quarter fiscal 2022 results. The Zacks Consensus Estimate for the quarterly earnings per share of 80 cents suggests an increase of 2.6% from the year-ago quarter.

Kroger’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $33.91 billion, which suggests a rise of 6.4% from the figure reported in the prior-year quarter. KR delivered an earnings beat of 15.7%, on average, in the trailing four quarters.

Casey's General Stores CASY currently has an Earnings ESP of +12.58% and a Zacks Rank #3. The company is expected to register a bottom-line increase when it reports second-quarter fiscal 2023 results. The Zacks Consensus Estimate for the quarterly earnings per share of $3.10 suggests an increase of 19.7% from the year-ago quarter.

Casey's General’s top line is anticipated to rise year over year. The consensus mark for CASY’s revenues is pegged at $4.16 billion, indicating an increase of 27.5% from the figure reported in the year-ago quarter. Casey's General has a trailing four-quarter earnings surprise of 1.3%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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