Analyst Note| Sean Dunlop |
No-moat Five Below’s somber outlook for fiscal 2023 overshadowed its fiscal 2022 fourth-quarter earnings report, which aligned with its preliminary announcement Jan. 9. Against the backdrop of macroeconomic uncertainty, the firm expects $3.49 billion-$3.59 billion in sales and $5.25-$5.76 in diluted earnings per share, just shy of our $3.66 billion and $5.93 respective forecasts. While our 2% comparable sales estimate is within the guided range of 1%-4%, 200 projected new store openings falls short of our 230-store estimate. As we intend to adjust our estimates to within management’s ranges, we expect to lower our $149 fair value estimate by a low-single-digit percentage. We continue to view the shares as expensive.