The shares of Five Below (FIVE) are taking a breather today after yet another run in with the $50 level – a region the shares have been consolidating below since mid-January. This pullback comes just ahead of FIVE’s fourth-quarter earnings report, which is due out before the open tomorrow, March 16. Below, we’ll dig into sentiment surrounding FIVE ahead of the event, and how the stock has behaved after past reports.
A closer look at FIVE’s technical setup does show some potential support at the $180 level, as well as the 80-day moving average, which captured a steep pullback in early March. Plus, the equity sports a year-over-year lead of 238.2%, and is up 10.6% year-to-date.
Unsurprisingly, analysts have been quite bullish on the equity, with all but four of the 16 in coverage calling it a “buy” or better. Plus, the 12-month consensus price target of $206.22 represents a level not yet touched by the security, and is a 6.3% premium to current levels.
The typically quiet options pits are brimming with activity today. So far, 4,105 calls and 914 puts have exchanged hands – seven times the intraday average. The most popular is the weekly 3/26 197.50-strike call, followed by the 200-strike call in the same weekly series, with positions being opened at both. This suggests these traders are expecting some upside for the equity following tomorrow’s earnings report.
This optimism isn’t entirely unfounded, based on FIVE’s past eight post-earnings moves. The security saw positive next-day returns after all but two of these last eight reports. This time around, the options market is pricing in a 10.5% return, regardless of direction, which is almost double the next-day move the equity has averaged over the past two years.
Chart of FIVE Since March 2020 with 80-Day Moving Average
And despite the sometimes volatile nature of earnings reports, option traders are pricing in relatively low volatility expectations for Five Below stock at the moment, making now a perfect time to speculate on the equity’s next move with options. This is per FIVE’s Schaeffer’s Volatility Index (SVI) of 48%, which stands higher than just 11% of readings from the past 12 months.
