Why Five Below Stock Is Soaring Today

Five Below (NASDAQ: FIVE) stock is gaining ground in Thursday's trading. The company's share price was up 6.5% as of 12:45 p.m. ET. Meanwhile, the S&P 500 (SNPINDEX: ^GSPC) was up 0.1%, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) was up 0.4%.

After the market closed yesterday, Five Below published results for the first quarter of its current fiscal year. It delivered sales and earnings that beat Wall Street's expectations for the quarterly period, which ended May 3.

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Five Below stock jumps on Q1 sales and earnings beats

For fiscal Q1, Five Below posted non-GAAP (generally accepted accounting principles) adjusted earnings per share of $0.86 on revenue of $970.53 million. Meanwhile, the average analyst estimate had called for the business to record adjusted earnings per share of $0.83 on sales of $966.49 million. Overall revenue was up 19.5% year over year in the period, with a 7.1% increase for same-store sales and new location openings helping to power strong revenue expansion in the period. Adjusted earnings per share were roughly 43% compared to last year's quarter.

What's next for Five Below?

For the current quarter, Five Below is guiding for sales to come in between $975 million and $995 million. The guidance range came in significantly better than the average Wall Street forecast, which had called for sales of $958.33 million. Five Below management expects same-store sales growth between 7% and 9% this quarter.

Meanwhile, adjusted earnings per share in fiscal Q2 are projected to be between $0.50 and $0.62. For comparison, the average Wall Street analyst estimate had called for adjusted earnings per share of $0.58 prior to Five Below's recent quarterly report. While the midpoint of management's earnings guidance came in below the average analyst estimate, guidance for strong same-store sales growth appears to have offset concerns related to the shortfall on the profit target.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Five Below. The Motley Fool has a disclosure policy.