- Wells Fargo says Five Below (FIVE +6.6%) stands out as a compelling investment idea in an increasingly difficult consumer investment landscape.
- Analyst Edward Kelly points to Five Below's aggressive tariff mitigation strategy that could even be accretive to earnings over time and the growing potential for the roll-out of Ten Below as early as next year. The retailer's possible move to national TV advertising as early as Holiday 2020 is also seen as a catalyst.
- WF's number crunching on Five Below: "We adjusted our 2019 EPS estimate to $3.15 from $3.02 and raised our 2020 estimate to $3.80 from $3.62 to include the stock comp benefit and the impact of neutral tariff mitigation (we have nothing in the model for accretion from the initiatives above). FIVE trades at 31.6x our 2020 EPS estimate, below its historical range. We believe it can return to at least 40x earnings on a strong holiday and the catalysts detailed above."
- Shares of FIVE are rated at Outperform and given a price target of $152.