Five Below (FIVE): A Turnaround Story With Fresh Momentum and Room to Run
Five Below trades around $173, and despite a strong 65% rally this year, we think this retailer may just be getting started. What stands out most right now is how dramatically the company’s fundamentals have improved in 2025. This hasn’t been a small lift or a seasonal bounce — the company has rebuilt momentum across traffic, ticket size, and total comp growth, and the third quarter was described by Truist as nothing short of a “game changer.” That’s not a phrase we use lightly, and the numbers back it up.
What’s interesting is that the stock still hasn’t caught up to the business. Truist upgraded FIVE to Buy and raised its price target to $216 (about 25% upside), noting that the valuation multiple remains below its historical average even as earnings revisions have moved sharply higher. In other words, the market hasn’t fully priced in the company’s new trajectory.
The operational turnaround is real. After hitting a wall last year due to stale product, poor in-store execution, and weak value perception, Five Below has fixed the core issues — and the payoff is showing up fast. Merchandise quality is stronger, product values are resonating, and store experience has improved significantly. The company has now delivered beats all year, with the third quarter marking its broadest and most balanced improvement across key performance drivers.
Looking ahead, the tailwinds don’t stop with internal improvements. Five Below’s customer base skews toward middle-income shoppers, a group that typically sees meaningful spending power after tax refund season. Truist expects FIVE to be one of the primary beneficiaries of this early-year catalyst, especially given its heavy discretionary mix. If the company continues executing and margins begin to recover toward historical levels, earnings could have more room to expand — and that supports the case for a higher valuation multiple.
With cleaner operations, strengthening comps, and upside drivers in 2026, we see Five Below as a retail momentum story that still isn’t fully appreciated by the market.
