Why Five Below's Big Earnings Miss Is No Big Deal
Five Below (NASDAQ: FIVE) has been a market wunderkind in the seven years since its IPO, nearly quadrupling in value (compared with a roughly 150% gain for the broad market) as it found the underserved teen and tween market especially lucrative.
Yet the stock fell over 10% after the company reported weaker-than-expected holiday sales last week that caused Five Below to dramatically lower its fourth-quarter and full-year guidance for both sales and profits. What had long been a retail juggernaut now appeared to be exceptionally vulnerable.
Five Below did regain most of the ground lost in the days that followed the earnings announcement as investors realized the discount retailer's business was not in serious danger. But the stock still trades below where it stood before the holiday sales update, and that provides an opportunity for investors to capitalize on where it will be heading.
Source Fool.com
