Five Below, Inc. (FIVE): what the price assumes

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/FIVE

Headline

Field	Value
Ticker	FIVE
Company	Five Below, Inc.
Sector / Industry	Consumer Defensive
Current price	$211.16/sh
Composition	Leisure 44% / Fashion and home 31% / Snack and seasonal 25%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Operating margin (value-band context)	3.5%
Operating margin today	11.0%
Margin compression (value-band)	-7.5pp
Must persist for	6.2y
Multiple paid	23x operating income

The operating-margin figure is value-band context at year 8: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 10.4% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.7 years.

Reconcile: at the x-ray's 9.3% required return this reads ~21.3%/yr; the models below use their own rates.

How unusual the bet is: elevated

Reference	Value
vs own history	-0.15σ
cohort percentile (of 68 peers)	60
sustained it ~6.2 years at this level	25%
implied end-window share	0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	2.45x	5	expensive
Earnings	5.01x	5	expensive
Relative	1.23x	5	expensive
Growth	0.69x	3	justifies

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.9%); the inversion above states its own rate.

Per-Model Detail (n=18)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$464.64	0.45x	yes	FCF base $0.6B, growth 25% (input: historical growth), terminal g 4.0%, WACC 7.9%, 7yr projection
DCF Exit Multiple	Growth	$307.63	0.69x	yes	Exit EV/EBITDA: 17.6x / 19.6x / 21.6x (bear / base = today's held flat / bull), 7yr
Relative Valuation	Relative	$171.92	1.23x	yes	P/E 22x (static sector reference · 2026-04), scenarios: 17.6x / 22.0x / 26.4x (bear / base = reference held flat / bull), EV/EBITDA 14x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$85.65	2.47x	yes	BV/sh $41.59, ROE (TTM) 19.1%, ke 9.3%
Two-Stage Excess Return	Asset	$121.48	1.74x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$274.89	0.77x	yes	Rev $5.1B, growth 26% (input: historical growth; tapered), Terminal P/S: 1.9x / 2.3x / 2.8x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair Value	Relative	$95.16	2.22x	yes	EPS $7.93, growth 2% (input: historical EPS growth), PEG=13.32 (Overvalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	$11.96	17.66x	yes	Normalized EBIT (5y avg op income, one-time charges added back) $0.40B × (1−24%) / WACC 7.9% → EPV (no growth)
Residual Income	Asset	$119.08	1.77x	yes	BV $41.59 + 5yr PV of (ROE (TTM) 19.1% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham Number	Asset	$86.14	2.45x	yes	√(22.5 × EPS $7.93 × BVPS $41.59) — Graham's conservative floor
EV/EBITDA Relative	Relative	$134.61	1.57x	yes	EBITDA $0.76B × sector EV/EBITDA 14.0x
FCF Yield	Earnings	$42.13	5.01x	yes	FCF $505.3M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$36.30	5.82x	yes	SBC-adj FCF $0.48B (FCF $0.51B − SBC $0.03B) capitalized at Kₑ
Ben Graham Formula	Earnings	$255.87	0.83x	yes	EPS $7.93 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	$11.28	18.72x	yes	BV $41.59 × (ROIC 2.2% / WACC 7.9%)
P/Sales Sector	Relative	$182.68	1.16x	yes	Revenue $5.08B × sector P/S 2.0x
PEG Fair Value	Relative	$297.38	0.71x	yes	EPS $7.93 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings Yield	Earnings	$85.73	2.46x	yes	EPS $7.93 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net cash	$1.1b
Net debt / NOPAT (after-tax)	-2.62x (net cash)
Net debt / operating income (pre-tax)	-1.99x (net cash)
Share count CAGR (buyback)	-0.1%
Burning cash	no

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Comparable sales rose 22.7% in the quarter ended 2 May 2026 and total sales rose 32.5% to 1,285.6 million dollars, which for a chain of nearly two thousand stores is the kind of figure that normally belongs to a company a tenth the size.
• The whole outlook rests on a trade assumption the company states in writing: its guidance reflects tariff rates in place through 24 July 2026 and assumes rates thereafter revert to where the fiscal year started, and the 10-K notes that there remains significant uncertainty regarding the processes that will govern refund claims related to the invalidated tariffs, the timing of any potential refunds, and the ultimate amounts, if any.
• Management has guided the year ending January 2027 to net sales of 5.40 to 5.48 billion dollars and diluted earnings of 8.62 to 9.02 dollars a share on about 150 net new stores, so the next two quarterly prints are a direct test of whether the current pace is a cycle or a level.

Bull Case

A store rollout is valued differently from almost anything else, and the reason is mechanical rather than philosophical. Every new store costs money before it earns any: fit-out, inventory, staff, pre-opening marketing. A chain opening stores fast therefore reports earnings that understate the earning power already built, because a meaningful share of the cost base belongs to stores that have not yet had a full year of trading. The right question for a business like this is not what it earned last year but what a mature store earns, how many more can be opened, and whether the stores already open are still getting busier. Five Below currently answers all three well, which is not where it was two years ago.

Take the store base first. The company opened 49 net new stores in the quarter ended 2 May 2026 and finished with 1,970 in 46 states, a store count 7.9% larger than a year earlier, with roughly 150 net openings planned for the full year. The 10-K states the case for the model directly: Our store growth is supported by our new store economics, which we believe to be compelling, built around a format of approximately 9,500 square feet. It also describes a specific opening tactic, clustering multiple store openings in a single market on the same day so that marketing and pre-opening costs are spread across several locations at once and brand awareness arrives all at the same moment.

The second answer is the rarer one. Comparable sales, meaning sales at stores already open a year or more, rose 22.7% in that quarter. Store growth of 7.9% with comparable growth of 22.7% means the existing base contributed roughly three quarters of the 32.5% increase in total sales. New stores are additive; the acceleration is coming from stores that already existed. Operating income rose to 154.2 million dollars from 50.8 million in the year-ago quarter, and net income reached 123.1 million from 41.1 million, or 2.21 dollars per diluted share against 0.75.

Rolled forward, the trailing picture is now genuinely good rather than merely recovering. Operating profit for the twelve months ended 2 May 2026 was 560.8 million dollars on sales of 5,079 million, built from the 457.4 million the company reported for the year ended 31 January 2026 plus the improvement in the most recent quarter. That is roughly 11 cents of operating profit on the sales dollar. In this group only OLLI comes close, at 11.4 cents, with DLTR at 8.8, DG at 5.3, M at 4.6, KSS at 3.9 and BJ at 3.7. A discount retailer earning double-digit operating margins while growing comparable sales in the twenties is not a common animal.

The balance sheet lets management keep going without asking anyone's permission. There is no funded borrowing at all, and liquid balances stood near 1.1 billion dollars. Capital spending of 230 to 250 million dollars is planned for the year, comfortably inside what the business generates. The 10-K is candid that the value proposition is being defended with price rather than assumed to hold on its own, noting that While we have been able to mitigate this impact to date through our pricing strategies, we are unable to predict how long the current inflationary environment will continue. A retailer whose entire promise is a low price point has to absorb cost inflation somewhere, and so far it has absorbed it in sourcing and mix rather than by breaking the price point.

Bear Case

Follow the money out of this business and it goes to exactly one place: more stores. Capital spending is guided to 230 to 250 million dollars for the current year. Share repurchases were zero across the entire year ended 31 January 2026, against 40.2 million dollars the year before, and the company's own outlook says it excludes the impact of tariff refunds and share repurchases, if any. There is no dividend. So every dollar earned is being reinvested into square footage, and the case for owning the stock is entirely the case that the 150th store opened this year earns what the first thousand do. That is a bet on the runway, and runways get shorter with each year of building.

The reinvestment also arrives with a financing structure that does not appear in the borrowing line. Five Below has no funded borrowing, but it has signed leases on nearly two thousand stores, and the non-current portion of those obligations alone stood at 1,698 million dollars on 2 May 2026. Read on a funded basis the company holds net liquid balances of roughly 1.1 billion dollars; read on a basis that counts the leases, the same balance sheet carries a net obligation of about 1.4 billion. Both readings are true and they describe different risks. Leases are fixed, long-dated and cannot be renegotiated when comparable sales turn.

Turn they might, because the single most important assumption in the outlook is not about retail at all. Guidance reflects tariff rates in place through 24 July 2026 and assumes they revert afterwards to where the year began, and it explicitly excludes any tariff refunds. The 10-K describes the aftermath of the court decision invalidating certain tariffs as leaving significant uncertainty regarding the processes that will govern refund claims related to the invalidated tariffs, the timing of any potential refunds, and the ultimate amounts, if any. For an importer of low-priced discretionary goods, tariffs are not a line item; they are the difference between a five-dollar price point working and not working. A comparable-sales number of 22.7% during a period of trade disruption may partly be customers trading down to this chain from more expensive ones, which is a cyclical gift, not a structural one.

The governance record adds friction rather than comfort. An executive officer's employment ceased on 3 February 2026, with a separation agreement providing a lump-sum payment of 700,000 dollars representing twelve months of base salary, a further 20,000 dollars toward healthcare continuation, additional payments of 22,048 and 10,000 dollars, continued vesting of 3,269 restricted stock units and ninety days of transition advice. Separately, the retention awards granted in fiscal 2024 are still large enough that the company reports its results twice, once including them and once excluding them. Retention packages and severance agreements are what a business pays when continuity is in question, and this one has been paying both.

Set against what the price assumes, the picture tightens. The methods that value this company without projecting growth land nowhere near the current share price: capitalising the average operating profit of the last several years with no growth at all reaches a small fraction of it, and the book-value approaches are not close either. Only the methods that carry the recent growth rate forward, and carry it for a long time, reach the price. That is a coherent position to take. It is also a position that requires the 22.7% comparable-sales quarter to be closer to the new normal than to the top of a cycle, and only about 14% of companies growing at comparable rates have held the pace for a decade.

Valuation

Management has told the market what it expects to earn, which makes the arithmetic unusually clean. Diluted earnings for the year ending January 2027 are guided to 8.62 to 9.02 dollars a share on roughly 55.7 million diluted shares, with net sales of 5.40 to 5.48 billion dollars. The shares trade near 203 dollars. Against the midpoint of that guided range the price sits a little above twenty-two times a year that has not finished yet, and that year already assumes comparable sales up 6% to 8% and about 150 new stores. The price is therefore paying a growth multiple on a growth year, not on a trailing one.

The methods disagree along a clean fault line, and the fault line is growth. The approaches that project the recent expansion forward and discount it back land above the current price, in one case well above. The peer-multiple approaches land close to it, slightly under. The approaches that assume no growth at all, capitalising the last several years' average operating profit or valuing the equity off book value plus profitability, land far below it. Nothing here is contradictory. It is the standard signature of a company whose value is mostly in what it has not built yet, and it means the entire premium above the peer-multiple read is the durability of the expansion.

The most concrete "what has to be true" is a store number rather than a margin. The company finished the quarter ended 2 May 2026 with 1,970 stores and intends to add roughly 150 this year, funded by 230 to 250 million dollars of gross capital spending. For the price to work, those additions have to earn something close to what the existing base earns, and the existing base has to keep improving. Both conditions were met in the most recent quarter: operating profit for the twelve months ended 2 May 2026 reached 560.8 million dollars on sales of 5,079 million, which works out near 11 cents of operating profit per sales dollar. Against the value-retail group that is at the top: OLLI at 11.4 cents, DLTR at 8.8, DG at 5.3, PSMT at 4.5, BJ at 3.7.

Solvency barely constrains anything here, which is itself the point. There is no funded borrowing, and liquid balances of roughly 1.1 billion dollars sit against a capital programme of a quarter of that size. On a lease-inclusive view the picture is different in character rather than in danger: the non-current portion of operating lease liabilities was 1,698 million dollars on 2 May 2026, which is what a two-thousand-store estate costs to commit to. The company can fund its own expansion and does not need markets to be open to do it. The trade-off it accepts is a fixed occupancy cost that does not shrink if the comparable-sales trend does.

Two facts sit uncomfortably together and are worth leaving with the reader rather than resolving. The trailing operating profit is the best in this peer group by margin, and the growth rate that produced it came during a period of tariff disruption the company's own guidance treats as temporary. The price reflects the first. What happens to the second is not visible from this data.

Catalysts

The first-quarter report on 3 June 2026 reset expectations upward. Net sales rose 32.5% to 1,285.6 million dollars against 970.5 million a year earlier, comparable sales rose 22.7%, operating income reached 154.2 million dollars against 50.8 million, and diluted earnings per share were 2.21 dollars against 0.75. The company opened 49 net new stores in the quarter, ending with 1,970 in 46 states, and raised its full-year sales and earnings outlook alongside the print.

The guidance itself carries a dated assumption that is the most consequential thing in this section. The outlook reflects tariff rates in place through 24 July 2026 and assumes rates thereafter return to those in place at the start of the fiscal year, and it excludes any tariff refunds and any share repurchases. For the second quarter the company guided net sales of 1.18 to 1.20 billion dollars on comparable sales up 7% to 9% with about 50 new stores, and diluted earnings of 1.15 to 1.27 dollars a share. That second-quarter print is the first look at whether the comparable-sales pace holds as the comparisons get harder.

One recent operational event is worth noting because it is disclosed and dated. On 15 July 2026 the company identified anomalous activity on an employee's company-issued computer; the investigation determined that on 14 July 2026 a threat actor used social engineering to gain unauthorised access to that machine and exfiltrated a number of files. The company states that its response contained and terminated the access, that the incident was limited to that employee's environment, that no personally identifiable information was accessed, and that it does not believe the incident is reasonably likely to have a material impact. That assessment is the company's own and rests on information available at the filing date, which is the usual caveat with these disclosures and the reason the next quarterly filing is where the matter is confirmed or revised.

Peer Cohorts (Per Segment, With Filing Citations)

Five Below (consolidated value retail) (reported)

• DLTR (DOLLAR TREE, INC.)
• FY2025 10-K: …with one another. Additionally, our people programs, as well as our meaningful focus on culture and belonging, reinforce our shared values and behaviors. For more information, see the "Our People" section below. Our Stores Our stores serve customers with a broad range of income levels principally in suburban…
• FY2025 10-K: $1.25 price point to provide greater value to our customers and increase customer traffic and store productivity. We are continuing to expand our multi-price product assortment, which began with the introduction of $3 and $5 products in select discretionary categories, expanded into $3, $4 and $5 frozen and…
• OLLI (Ollie’s Bargain Outlet Holdings, Inc.)
• FY2025 10-K: …could differ from those estimates. (e) Cash, Cash Equivalents, and Short-term Investments The Company considers cash on hand in stores, bank deposits, credit card receivables, and all highly liquid investments such as money market funds, treasury bonds and municipal bonds with remaining maturities of three months or…
• FY2025 10-K: Composite Total Return index and the NASDAQ US Benchmark Retail Index and assumes the reinvestment of dividends, if any. Such returns are based on historical results and are not intended to suggest future performance. 2/1/20 1/30/21 1/29/22 1/28/23 2/3/24 2/1/25 Ollie's Bargain Outlet Holdings, Inc. 100.00 178.60…
• DG (DOLLAR GENERAL CORP)
• FY2025 10-K: …operate stores in many of the areas where we operate, and many of them engage in extensive advertising and marketing efforts. Our direct competitors include Family Dollar, Dollar Tree, and various local, independent operators, as well as Walmart, Target, Kroger, Aldi, Costco, Sams Club, BJ's Wholesale Club,…
• FY2025 10-K: , and in December 2013 the entity controlled by investment funds affiliated with KKR sold its remaining shares of our common stock. ​ Our Business Model ​ Our long history of profitable growth is founded on a commitment to a relatively simple business model: providing a broad base of customers with their basic…
• BURL (BURLINGTON STORES, INC.)
• FY2025 10-K: …future returns, which is estimated based on historical return rates. We present sales, net of sales taxes, in our Consolidated Statements of Income. We account for layaway sales in compliance with ASC Topic No. 606 "Revenue from Contracts with Customers." Layaway sales are recognized upon delivery of merchandise to…
• FY2025 10-K: May 2019). Current Report on Form 8-K May 22, 2017 10.14+ Form of Non-Qualified Stock Option Agreement between Burlington Stores, Inc. and Employees without Employment Agreements pursuant to Burlington Stores, Inc. 2013 Omnibus Incentive Plan, as amended and restated May 17, 2017 (for grants made from and after May…
• PSMT (PriceSmart, Inc.)
• FY2025 10-K: , and the expired unused rebates are recognized as "Other revenue and income" on the consolidated statements of income. Co-branded Credit Card Points Reward Programs. Most of the Company's subsidiaries have points reward programs related to co-branded credit cards. These points reward programs provide incremental…
• FY2025 10-K: …of the depreciable lives of certain leasehold improvements, which were previously limited to the lease term, lowering future annual depreciation. Going forward, the lower annual depreciation expense and the cost savings on straight-line rent expense, partially offset by the depreciation expense on the building, will…
• BJ (BJ’S WHOLESALE CLUB HOLDINGS, INC.)
• FY2025 10-K: …programs 71,528 57,909 Membership 253,262 231,440 Gift card program 16,778 15,290 E-commerce sales 7,839 6,757 Long-term: Rewards programs: Co-brand initiatives 3,139 6,216 Total deferred revenue $ 352,546 $ 317,612 Current and long-term deferred revenue balances are included within accrued expenses and other current…
• FY2025 10-K: …of measured prices. At a minimum, we will use an average of two consecutive periodic or monthly measurements of prices at both BJ's (using our chain average price) and the Supermarket Competitors. We may use up to 52 consecutive weeks, or 12 consecutive months, of price data for comparison. We make our savings claim…
• M (Macy's, Inc.)
• FY2025 10-K: …Consolidated Financial Statements and related notes to the Consolidated Financial Statements that were impacted by this misstatement to properly report delivery expense, the related accrual and tax effects. Net Sales Revenue is recognized when customers obtain control of goods and services promised by the Company.…
• FY2025 10-K: Chicago, IL Stores Owned 862 Columbus, OH Stores Leased 673 Dayton, OH Stores Leased 107 Denver, CO Stores Leased 20 Goodyear, AZ Direct to customer Owned 1,560 Hayward, CA Stores Owned 310 Joppa, MD Stores Owned 850 Lathrop, CA Direct to customer Leased 273 Kapolei, HI Stores Leased 260 Los Angeles, CA Stores Owned…
• KSS (KOHL'S CORP)
• FY2025 10-K: …deposit with original maturities of three months or less. We carry these investments at cost which approximates fair value. Also included in cash and cash equivalents are amounts due from credit card transactions with settlement terms of less than five days. Credit and debit card receivables included within cash were…
• FY2025 10-K: …applicable margin. Outstanding borrowings under the revolving credit facility, recorded as short-term debt, were $290 million as of February 1, 2025. We share in the net risk-adjusted revenue of the Kohl's credit card portfolio as defined by the sum of finance charges, late fees, and other revenue less write-offs of…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

FY2026 Form 10-K filed 19 March 2026 and Q1 Form 10-Q filed 4 June 2026 · company 8-K, 9 February 2026 · Q1 fiscal 2026 results release, 3 June 2026 · company 8-K, 22 July 2026