Louis Navellier's The Little Book That Makes You Rich distills growth investing into eight measurable rules: rising analyst estimates, consistent earnings surprises, accelerating sales and earnings, expanding margins, strong cash flow, and high return on equity. FIVE BELOW (NASDAQ:FIVE) is a specialty value retailer whose latest fundamental readings line up with most of those requirements, making it a name that growth investors using this methodology may want to study.
The strategy behind the screen
Navellier's approach is built on the idea that the market rewards companies that repeatedly beat expectations and compound growth from a position of financial strength. Analyst revisions are important because upward estimate changes often signal that new information has not yet been fully reflected in the stock price. Earnings surprises matter because they reveal whether a company can outperform even the conservative estimates Wall Street already publishes.
The screen built from the book also looks for accelerating momentum in both revenue and earnings. A company that grows sales and profits faster than it did in recent quarters tends to attract more analyst attention, which can create a positive feedback loop. Strong free cash flow and an expanding operating margin add quality and efficiency to the growth story, while a solid return on equity shows that management is putting shareholder capital to work effectively.
How Five Below measures up
Five Below clears the posted thresholds on nearly every screen input, often by a wide margin. The key fundamental readings are:
- Positive earnings revisions: The next-quarter EPS estimate has been raised by 20.24% over the past three months, well above the 4% threshold.
- Earnings surprises: The company has beaten EPS estimates in all four of the last quarters, with an average beat of 58.19%.
- Sales growth: Revenue grew 25.87% on a trailing twelve-month basis, while quarter-over-quarter sales growth came in at 32.46%, comfortably above the 20% requirements.
- Operating margin expansion: Operating margin growth over the past year was 31.61%, far exceeding the 2% minimum.
- Cash flow strength: Free cash flow growth over the trailing year was 702.75%, a dramatic improvement relative to the prior period.
- Earnings growth: EPS grew 51.32% on a TTM basis, and the most recent quarter showed 158.14% year-over-year EPS growth, compared with 43.33% growth four quarters ago. That acceleration is exactly the kind of earnings momentum the strategy seeks.
- Return on equity: ROE stands at 19.05%, above the 10% minimum and well within the range Navellier associates with efficient capital use.
Those numbers are not just a collection of pass/fail signals. The combination of upward estimate revisions, strong beats, and accelerating EPS growth suggests that Five Below may still be in the early stages of being re-rated by analysts. At the same time, the margin expansion and cash flow generation provide a healthier foundation than many high-growth retailers can show.
Fundamental quality in context
The comprehensive fundamental report assigns Five Below a score of 7 out of 10, driven by strong profitability and a very solid balance sheet. The company has positive earnings and operating cash flow in each of the past five years, and its profitability ratios compare well with industry peers. Return on assets, return on equity, and return on invested capital all rank in the upper quartile of the specialty retail group, while profit and operating margins are among the best in the industry.
Health metrics are also encouraging. Five Below carries no outstanding debt, giving it Debt/Equity and Debt/FCF ratios of zero. Its Altman-Z score of 5.14 points to a low bankruptcy risk, and the current ratio of 2.10 suggests no near-term liquidity concerns. The main caveat is valuation: the trailing P/E of 30.49 and forward P/E of 24.44 are not cheap on an absolute basis. However, growth expectations of roughly 19% to 28% in EPS over the coming years keep the PEG ratio low enough to support the case that the market is paying for visible momentum rather than speculative promise.
Investors who want to dig into the full fundamental breakdown can use this detailed fundamental analysis report.
Risks to consider
The screen is deliberately focused on short-term fundamental momentum, which means it can surface companies that have run ahead of their intrinsic value. Five Below's valuation already reflects a fair amount of optimism, so any stumble in sales, margins, or earnings guidance could pressure the stock. The retail environment also carries execution risk around inventory, consumer spending, and competition from other value-oriented chains. For a strategy like Navellier's, those risks are manageable as long as the fundamental signals remain intact, but they deserve monitoring.
Other screens confirm the growth profile
Five Below also appears on related Chartmill growth screens that reinforce the article’s main thesis.
These cross-checks show that FIVE’s fundamental momentum is not confined to one specific screening methodology.
Where to find similar opportunities
Investors who want to run this growth-focused methodology across the broader market can find more stocks that match the Little Book approach through this screener results page. It offers a practical starting point for identifying companies with the same combination of estimate revisions, earnings acceleration, margin strength, and cash flow discipline.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Always conduct your own research and consider your risk tolerance before making investment decisions.
Read full article here »
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Five Below (NASDAQ:FIVE) Demonstrates High Growth and Improving Fundamentals
Louis Navellier's The Little Book That Makes You Rich distills growth investing into eight measurable rules: rising analyst estimates, consistent earnings surprises, accelerating sales and earnings, expanding margins, strong cash flow, and high return on equity. FIVE BELOW (NASDAQ:FIVE) is a specialty value retailer whose latest fundamental readings line up with most of those requirements, making it a name that growth investors using this methodology may want to study.
The strategy behind the screen
Navellier's approach is built on the idea that the market rewards companies that repeatedly beat expectations and compound growth from a position of financial strength. Analyst revisions are important because upward estimate changes often signal that new information has not yet been fully reflected in the stock price. Earnings surprises matter because they reveal whether a company can outperform even the conservative estimates Wall Street already publishes.
The screen built from the book also looks for accelerating momentum in both revenue and earnings. A company that grows sales and profits faster than it did in recent quarters tends to attract more analyst attention, which can create a positive feedback loop. Strong free cash flow and an expanding operating margin add quality and efficiency to the growth story, while a solid return on equity shows that management is putting shareholder capital to work effectively.
How Five Below measures up
Five Below clears the posted thresholds on nearly every screen input, often by a wide margin. The key fundamental readings are:
Those numbers are not just a collection of pass/fail signals. The combination of upward estimate revisions, strong beats, and accelerating EPS growth suggests that Five Below may still be in the early stages of being re-rated by analysts. At the same time, the margin expansion and cash flow generation provide a healthier foundation than many high-growth retailers can show.
Fundamental quality in context
The comprehensive fundamental report assigns Five Below a score of 7 out of 10, driven by strong profitability and a very solid balance sheet. The company has positive earnings and operating cash flow in each of the past five years, and its profitability ratios compare well with industry peers. Return on assets, return on equity, and return on invested capital all rank in the upper quartile of the specialty retail group, while profit and operating margins are among the best in the industry.
Health metrics are also encouraging. Five Below carries no outstanding debt, giving it Debt/Equity and Debt/FCF ratios of zero. Its Altman-Z score of 5.14 points to a low bankruptcy risk, and the current ratio of 2.10 suggests no near-term liquidity concerns. The main caveat is valuation: the trailing P/E of 30.49 and forward P/E of 24.44 are not cheap on an absolute basis. However, growth expectations of roughly 19% to 28% in EPS over the coming years keep the PEG ratio low enough to support the case that the market is paying for visible momentum rather than speculative promise.
Investors who want to dig into the full fundamental breakdown can use this detailed fundamental analysis report.
Risks to consider
The screen is deliberately focused on short-term fundamental momentum, which means it can surface companies that have run ahead of their intrinsic value. Five Below's valuation already reflects a fair amount of optimism, so any stumble in sales, margins, or earnings guidance could pressure the stock. The retail environment also carries execution risk around inventory, consumer spending, and competition from other value-oriented chains. For a strategy like Navellier's, those risks are manageable as long as the fundamental signals remain intact, but they deserve monitoring.
Other screens confirm the growth profile
Five Below also appears on related Chartmill growth screens that reinforce the article’s main thesis.
These cross-checks show that FIVE’s fundamental momentum is not confined to one specific screening methodology.
Where to find similar opportunities
Investors who want to run this growth-focused methodology across the broader market can find more stocks that match the Little Book approach through this screener results page. It offers a practical starting point for identifying companies with the same combination of estimate revisions, earnings acceleration, margin strength, and cash flow discipline.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Always conduct your own research and consider your risk tolerance before making investment decisions.
Read full article here »