How the Latest Expansion Plans Impact Five Below’s Rising Share Price in 2025

Curious if Five Below is a hidden gem or simply priced right in today’s market? You’re in the right place to find out where its real value lies and whether the stock deserves a spot on your radar. Five Below’s share price has moved around recently, rising 10.0% over the past month and jumping an impressive 53.7% since the start of the year, but down 3.2% in just the past week. This volatility signals shifting market views on its future potential. Investors have taken notice after new store expansion plans and strategic partnerships were announced in recent weeks. Both developments could reshape growth expectations. News surrounding the retail sector’s changing dynamics and consumer spending trends has also contributed to increased attention on stocks like Five Below. According to our valuation checks, Five Below scores just 1/6 for being undervalued, but that’s only part of the story. Next, we’ll look at a few common ways to value stocks, while saving an even smarter approach for the end of the article.

Five Below scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Five Below Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and then discounting them back to today's value. This gives investors a clearer sense of what the stock is truly worth based on expected performance.

For Five Below, the current Free Cash Flow (FCF) stands at $224.7 million. Analysts provide projections for the next five years, forecasting healthy FCF growth, with values expected to reach $309 million by 2029. Beyond this, further estimates are extrapolated based on trends and reasonable assumptions. All projections and calculations have been conducted in US dollars.

According to the DCF model (using the 2 Stage Free Cash Flow to Equity methodology), the estimated intrinsic value for Five Below comes in at $86.38 per share. Compared with the current share price, this represents an implied discount of -76.3 percent, suggesting the stock is trading far above its estimated true worth.

In summary, the DCF approach sees Five Below as significantly overvalued in the market right now, even after factoring in projected growth in free cash flow over the coming years.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Five Below may be overvalued by 76.3%. Discover 875 undervalued stocks or create your own screener to find better value opportunities.FIVE Discounted Cash Flow as at Nov 2025

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Five Below.

Story Continues

Approach 2: Five Below Price vs Earnings

The Price-to-Earnings (PE) ratio is a popular valuation metric for profitable companies like Five Below because it provides a quick snapshot of how much investors are willing to pay for a dollar of current earnings. A higher PE often reflects expectations of future growth, while a lower ratio may signal market skepticism or increased risk.

Deciding what counts as a “normal” or “fair” PE ratio depends on several factors, including growth prospects and risk profile. Companies expected to grow earnings quickly generally deserve a higher PE, whereas slower-growing or riskier businesses usually trade at lower ratios. For context, Five Below currently trades at 30.8x earnings, compared to the Specialty Retail industry average of 18.4x and a peer group average of 33.3x.

Simply Wall St’s proprietary “Fair Ratio” sharpens this view by tailoring the expected PE to Five Below’s unique features such as earnings growth, profit margin, industry positioning, company size, and specific risks. This personalized benchmark (set at 19.2x for Five Below) offers a more accurate gauge of valuation than a simple industry or peer comparison, since it adjusts for the company’s own fundamentals rather than relying on broad groupings.

With Five Below’s PE ratio noticeably higher than both its fair ratio (19.2x) and the industry average, the stock looks overvalued using this approach.

Result: OVERVALUEDNasdaqGS:FIVE PE Ratio as at Nov 2025

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1405 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Five Below Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your personal story behind the numbers; it’s how you connect your own perspective about Five Below’s future to specific assumptions on its revenue, margins, and fair value.

Narratives blend a company’s story with your own financial expectations, letting you see how your view translates directly into forecasts and, ultimately, a fair value for the stock. Whether you’re optimistic about Five Below’s appeal to younger shoppers and see robust growth ahead, or cautious about risks like tariff pressures and slowing margins, your Narrative reflects your belief and shows you what that means for the stock’s valuation.

The best part? Narratives are simple to use and available right on the Community page at Simply Wall St, trusted by millions of investors. They help you decide when to buy or sell by comparing your Fair Value to the current Price, making your investment decisions clearer and more personalized. Plus, Narratives are dynamic; whenever new news or earnings are released, your fair value updates automatically so you’re always making decisions with the latest information.

For example, among Five Below investors, some may build a Narrative valuing the shares as high as $185, focusing on growth and operational upgrades, while others set their fair value near $90, highlighting concerns over tariffs and competition. This demonstrates how every investor can see their perspective brought to life.

Do you think there's more to the story for Five Below? Head over to our Community to see what others are saying!NasdaqGS:FIVE Community Fair Values as at Nov 2025

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include FIVE.

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