Five Below (NASDAQ:FIVE) is set to release Q2 earnings Wednesday, September 2, after the close. The stock currently trades at a premium 20.28x trailing EBITDA.
Unit growth should remain strong but comps have shown slowing trends. A lawsuit concerning heavy insider selling from the company’s co-founders compounds the premium valuation.
The company has grown store count at a 27% CAGR since 2010 to 366 stores nationally. FIVE still has regions it has yet to penetrate, so we believe this strong unit growth should continue.
Sales per store (net sales per store count at year end) has grown at an 8% CAGR since 2010 to $1.86 million in 2014 (NOTE: this is different from the metric used in the company’s SEC filings, which only accounts for full-year stores).
Analysts believe sales per store growth should slow, however, due to the law of large numbers coupled with slowing comps.