Discount Retailer Stocks Q3 Earnings: Five Below (NASDAQ:FIVE) Firing on All Cylinders

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Five Below (NASDAQ:FIVE) and the rest of the discount retailer stocks fared in Q3.

Discount retailers understand that many shoppers love a good deal, and they focus on providing excellent value to shoppers by selling general merchandise at major discounts. They can do this because of unique purchasing, procurement, and pricing strategies that involve scouring the market for trendy goods or buying excess inventory from manufacturers and other retailers. They then turn around and sell these snacks, paper towels, toys, clothes, and myriad other products at highly enticing prices. Despite the unique draw and lure of discounts, these discount retailers must also contend with the secular headwinds of online shopping and challenged retail foot traffic in places like suburban strip malls.

The 5 discount retailer stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was 0.8% below.

Thankfully, share prices of the companies have been resilient as they are up 5.8% on average since the latest earnings results.

Best Q3: Five Below (NASDAQ:FIVE)

Often facilitating a treasure hunt shopping experience, Five Below (NASDAQ:FIVE) is an American discount retailer that sells a variety of products from mobile phone cases to candy to sports equipment for largely $5 or less.

Five Below reported revenues of $1.04 billion, up 23.1% year on year. This print exceeded analysts’ expectations by 6.3%. Overall, it was a stunning quarter for the company with EPS guidance for next quarter exceeding analysts’ expectations and a beat of analysts’ EPS estimates.

Winnie Park, CEO of Five Below, said, "We are thrilled to report third quarter results that surpassed our expectations, marking our second consecutive quarter of over $1 billion in sales and robust double-digit same-store sales growth. This outstanding performance reflects our Crew's great execution of our customer-centric strategy: delivering trend-right merchandise at exceptional value, connecting with our customers through compelling marketing campaigns, and creating amazing shopping experiences that truly resonate.”

Five Below pulled off the biggest analyst estimates beat and fastest revenue growth, but had the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is up 15% since reporting and currently trades at $189.25.

Is now the time to buy Five Below? Access our full analysis of the earnings results here, it’s free for active Edge members.

Ross Stores (NASDAQ:ROST)

Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ:ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.

Ross Stores reported revenues of $5.60 billion, up 10.4% year on year, outperforming analysts’ expectations by 2.6%. The business had a very strong quarter with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ revenue estimates.

The market seems happy with the results as the stock is up 12.3% since reporting. It currently trades at $180.22.

Is now the time to buy Ross Stores? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Ollie's (NASDAQ:OLLI)

Often located in suburban or semi-rural shopping centers, Ollie’s Bargain Outlet (NASDAQ:OLLI) is a discount retailer that acquires excess inventory then sells at meaningful discounts.

Ollie's reported revenues of $613.6 million, up 18.6% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted a narrow beat of analysts’ EBITDA estimates but revenue in line with analysts’ estimates.

As expected, the stock is down 5.1% since the results and currently trades at $112.75.

Read our full analysis of Ollie’s results here.

TJX (NYSE:TJX)

Initially based on a strategy of buying excess inventory from manufacturers or other retailers, TJX (NYSE:TJX) is an off-price retailer that sells brand-name apparel and other goods at prices much lower than department stores.

TJX reported revenues of $15.12 billion, up 7.5% year on year. This result beat analysts’ expectations by 1.5%. It was a strong quarter as it also logged a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ gross margin estimates.

The stock is up 5.6% since reporting and currently trades at $153.70.

Read our full, actionable report on TJX here, it’s free for active Edge members.

Burlington (NYSE:BURL)

Founded in 1972 as a discount coat and outerwear retailer, Burlington Stores (NYSE:BURL) is now an off-price retailer that has broadened into general apparel, footwear, and home goods.

Burlington reported revenues of $2.71 billion, up 7.1% year on year. This number was in line with analysts’ expectations. Aside from that, it was a satisfactory quarter as it also produced an impressive beat of analysts’ EBITDA estimates but revenue guidance for next quarter slightly missing analysts’ expectations.

Burlington had the weakest performance against analyst estimates and slowest revenue growth among its peers. The stock is up 1.2% since reporting and currently trades at $287.94.

Read our full, actionable report on Burlington here, it’s free for active Edge members.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.