Retail Stock Surging on Earnings Beat

Five Below stock is attempting a post-earnings rebound

Deputy Editor
Mar 19, 2020 at 10:52 AM
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Discount retailer Five Below Inc (NASDAQ:FIVE) is surging 7.5% at $57.62 this morning, climbing on the heels of an impressive quarterly report, though earlier it bottomed near $47.53. The retail company posted earnings of $1.97 per share, higher than Wall Street's estimate of $1.94. However, the company's reported revenue of $687.13 million is slightly lower than the anticipated $687.15 million. Despite the impressive beat, no fewer than eight analysts have cut their price targets -- RBC lowering all the way down to $66 from $72.

Analysts are bullish coming into today, with 11 out of 17 sporting a "strong buy" or "buy" rating, and not a single "sell" on the books. The current 12-month consensus target price is $90.88, or a 69.6% premium to current levels.

In the last two reporting periods, short interest on FIVE has risen 31.5%, to 5.30 million shares. This accounts for 9.83% of the stock's available float, or nearly four days' worth of pent-up buying power.

This optimistic sentiment has not carried through to the options pits, however. Puts are heavily are favored, as FIVE sports a 10-day put/call volume ratio of 2.91 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), that sits higher than 94% of readings from the past year.

FIVE is fighting against the multiple bear gaps it has suffered in 2020 already, and remains down 54% year-to-date. Plus, Five Below shares sport a 14-day Relative Strength Index (RSI) of 24 -- in "oversold" territory, suggesting it may have been due for a short-term bounce. 

 

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