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Five Below Reports 41st Consecutive Quarter Of Comps Growth; RBC Analysts Are 'Aggressive Buyers'

FIVE - Five Below Reports 41st Consecutive Quarter Of Comps Growth; RBC Analysts Are 'Aggressive Buyers'

Five Below Inc FIVE 1.35% reported on Wednesday its second-quarter results, which consisted of not only top- and bottom-line beats but was the 41st consecutive quarter of positive comps.

Scot Ciccarelli of RBC Capital Markets pointed out the Five Below's comp streak in a research report. The analyst also highlighted Five Below's "very impressive" EBIT growth, an "industry-leading" unit economics and 85 percent of growth stemming from new stores.

Ciccarelli went on to say the 3.1 percent reported comp came at a time when management cited "sizable weather challenges." The analyst also noted Five Below has "relatively heavy" exposure to the Northeast region where "weather gyrations were more profound."

Looking forward, Ciccarelli acknowledged that while Five Below's third quarter comp guidance of 1–2 percent is below his 3 percent forecast, management's outlook still implies a "roughly flat 2-year stacked trends given the more difficult comparison the company is facing."

Bottom line, Five Below is well positioned to serve as a "go-to destination" for teen and pre-teen customers and its low price provides some defense against e-commerce and allows for many teens to shop independently of their parents and use their own money. As such, the recent decline in Five Below's stock as of late should prompt investors to become "aggressive buyers" of the stock.

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DateFirmActionFromTo
Aug 2016BTIG ResearchInitiates Coverage onNeutral
Aug 2016UBSMaintainsBuy
Aug 2016Deutsche BankMaintainsHold

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