FIVE BELOW, INC (FIVE) Stock Analysis
FIVE BELOW, INC (FIVE) Stock Analysis
Overall Grade: F (Concerning)
View interactive company profile →
FIVE BELOW, INC faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | 8.2% | Near cost of capital |
| FCF Margin | 7.3% | Healthy cash flow |
| Debt/Equity | 0.0x | Conservative leverage |
Investment Thesis: Financial metrics indicate concerning business quality with areas requiring attention.
What is FIVE BELOW, INC's Profitability and ROIC?
FIVE BELOW, INC's return on invested capital of 8.2% is around industry norms. Gross margin of 35.6% with operating margin at 8.9% reflects the company's moderate market position.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 8.2% | Adequate | Adequate returns |
| Return on Equity (ROE) | 16.7% | Good | Efficient use of shareholder equity |
| Gross Margin | 35.6% | Good | Competitive pricing environment |
| Operating Margin | 8.9% | Adequate | Moderate operational efficiency |
How Strong is FIVE BELOW, INC's Cash Flow Quality?
FIVE BELOW, INC generated $323.0M in free cash flow over the trailing twelve months, representing a 7.3% margin. Cash earnings quality is strong, with operating cash flow exceeding net income by 1.7x.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | 7.3% | Adequate | Healthy cash generation |
| Free Cash Flow (TTM) | $323.0M | Good | Positive cash generation |
| OCF/Net Income | 1.7x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is FIVE BELOW, INC's Financial Health?
FIVE BELOW, INC's debt-to-equity ratio of 0.0x indicates conservative leverage.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Debt to Equity | 0.0x | Excellent | Conservative capital structure |
Is FIVE BELOW, INC Stock Overvalued or Undervalued?
FIVE BELOW, INC trades at a P/E of 28.1x, representing a premium to the sector median of N/A. Free cash flow yield of 3.7% reflects market expectations for growth.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | 28.1x | Adequate | Premium valuation |
| EV/Sales | 1.8x | Excellent | Attractive revenue multiple |
| FCF Yield | 3.7% | Adequate | Lower cash yield |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 8.2% | Bottom 50% | 0.8x below |
| Free Cash Flow Margin | 7.3% | Top 50% | 2.3x above |
| Gross Margin | 35.6% | Bottom 50% | 0.9x below |
| Operating Margin | 8.9% | Top 50% | 1.8x above |
| Return on Equity (ROE) | 16.7% | Top 50% | 1.4x above |
| P/E Ratio | 28.1x | N/A | - |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: 8.2% (Adequate - Bottom 50% of sector (median: 9.8%))
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: 7.3% (Adequate - Top 50% of sector (median: 3.2%))
Gross Margin
Revenue minus cost of goods sold as a percentage. Higher gross margins indicate pricing power and competitive advantage.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 50% | Strong pricing power and competitive moat |
| Good | 30% - 50% | Healthy margins, differentiated product |
| Adequate | 20% - 30% | Moderate margins, competitive industry |
| Warning | 10% - 20% | Thin margins, commodity-like business |
| Red flag | < 10% | Very thin margins, structural challenges |
Current: 35.6% (Good - Bottom 50% of sector (median: 40.9%))
Debt to Equity Ratio
Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 0.3x | Conservative leverage, strong balance sheet |
| Good | 0.3x - 0.7x | Moderate leverage, healthy financial position |
| Adequate | 0.7x - 1.5x | Elevated leverage, monitor closely |
| Warning | 1.5x - 3.0x | High leverage, increased financial risk |
| Red flag | > 3.0x | Excessive leverage, potential distress risk |
Current: 0.0% (Excellent)
P/E Ratio (Price-to-Earnings)
Stock price divided by earnings per share. Lower P/E may indicate undervaluation, while higher P/E suggests growth expectations.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 15x | Attractively valued, potential opportunity |
| Good | 15x - 25x | Fair value for quality company |
| Adequate | 25x - 35x | Growth premium, justify with earnings growth |
| Warning | 35x - 50x | High expectations priced in |
| Red flag | > 50x or negative | Speculative valuation or losses |
Current: 28.1x (Adequate)
Free Cash Flow Yield
Free cash flow per share divided by stock price. Higher FCF yield indicates better cash return relative to valuation.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 8% | High cash return, potential value opportunity |
| Good | 5% - 8% | Solid cash yield |
| Adequate | 3% - 5% | Moderate cash return |
| Warning | 1% - 3% | Low cash yield, growth expectations |
| Red flag | < 1% | Minimal cash return to shareholders |
Current: 3.7% (Adequate)
Frequently Asked Questions
Q: What is FIVE BELOW, INC's Return on Invested Capital (ROIC)?
FIVE BELOW, INC (FIVE) has a trailing twelve-month Return on Invested Capital (ROIC) of 8.2%. This compares below the sector median of 9.8%. An ROIC near 8-12% is approximately the cost of capital for most companies.
Q: What is FIVE BELOW, INC's Free Cash Flow Margin?
FIVE BELOW, INC (FIVE) has a free cash flow margin of 7.3%, generating $323.0 million in free cash flow over the trailing twelve months. A FCF margin between 5-10% is typical for capital-intensive businesses.
Q: Is FIVE BELOW, INC stock overvalued or undervalued?
FIVE BELOW, INC (FIVE) trades at a P/E ratio of 28.1x, which is above the sector median of N/A. The EV/Sales multiple is 1.8x. Free cash flow yield is 3.7%, which is in line with market averages.
Q: What is FIVE BELOW, INC's revenue and earnings growth?
FIVE BELOW, INC (FIVE) grew revenue by 15.8% year-over-year. Earnings per share increased by 14.8% compared to the prior year. Solid growth above 10% suggests healthy business momentum.
Q: How does FIVE BELOW, INC compare to competitors in Consumer Discretionary?
Compared to other companies in Consumer Discretionary, FIVE BELOW, INC (FIVE) shows: ROIC of 8.2% is below the sector median of 9.8% (Bottom 44%). FCF margin of 7.3% exceeds the sector median of 3.2% (Top 26% of sector). Gross margin at 35.6% is 5.2 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Consumer Discretionary companies with available SEC filings.
Q: What warning signs should I watch for with FIVE BELOW, INC?
Investors in FIVE BELOW, INC (FIVE) should monitor these potential warning signs: 1) ROIC has been declining, potentially signaling deteriorating competitive position. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-12-04. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.