Five Below Stock Surges on Earnings, Rally May Be Brief

Off-price retail stocks have had a good week, and Five Below Inc. NASDAQ: FIVE was no exception. After the market closed on June 4, the company reported strong earnings and raised its full-year guidance. FIVE stock is up more than 50% after bottoming out after the Liberation Day tariffs announced in April. However, even after the strong results, investors may not want to chase FIVE stock at these levels.

The headline results for Five Below were bullish. Net sales came in at $970.5 million that was a 19.5% year-over-year (YOY) increase from the $811.9 million in the same quarter last year. The company also reported that comparable sales increased by 7.1%.

On the bottom line, earnings per share (EPS) of 86 cents beat expectations of 83 cents per share and were 43% higher YOY. The company cited its “trend-right product” strategy and store expansion as the reasons for its strong performance.

However, the story for all retailers in 2025 is guidance, which was also bullish. The company raised its full-year revenue outlook to a range between $4.33 billion and $4.42 billion, which puts the low end to the high end of its previous guidance. Five Below also raised the low end of its full-year EPS outlook to $4.25 from $4.10.

Both numbers assume the company will open an additional 30 new stores to the 50 it opened in the last quarter. That is expected to drive an estimated 7% to 9% increase in comparable store sales.

Will Tariffs Sink FIVE Stock?

A significant concern heading into earnings was the impact of tariffs on a company like Five Below, which sources much of its inventory from China. The company acknowledged that its guidance was based on where things stood today.

However, it also said it was working on diversifying where it sourced its product from. Specifically, it noted it had already reduced goods sourced from China by approximately 10% for the second half of 2025.

The Bullish Results Are Likely Priced Into FIVE Stock

FIVE stock is up more than 57% in the last 30 days. That was due in large part to a gap-up move in mid-May when Five Below issued a bullish pre-earnings release. That strong move has pushed the stock more than 20% above its consensus price target of $103.45. That means investors were front-running the earnings report.

Five Below didn’t disappoint. However, the stock is trading near its 52-week high, and any disappointing news regarding tariffs is likely to send the stock lower. Fundamentally, with a forward price-to-earnings (P/E) ratio of around 26x, it’s expensive compared to itself.

Investors may want to wait for a pullback before getting involved. That’s supported by the stock’s relative strength indicator (RSI), which is around 74, indicating overbought conditions in the stock.

Two areas to watch are a price around $121.50 and another around $107.25, as they correlate with FIVE stock’s 50-day moving average.

Analysts Are Quick to Raise Targets

The price movement in any stock after a post-market earnings report can change quickly on the following trading day. One reason for that is that the following days give analysts time to chime in.

FIVE stock continues to hold on to gains of more than 7%, but it has pulled back from its opening price of around $135. An encouraging sign for investors is that the Five Below analysts’ forecasts on MarketBeat show six analysts reiterating a bullish rating for the stock, with several raising their price targets.

The most bullish of these comes from UBS Group, which raised its target from $110 to $160. Further price increases would support a case to buy FIVE stock on any meaningful dip.

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