Five Below, Inc. (FIVE) Stock Valuation — DCF Analysis
Discount Stores · NASDAQ
Current Price
$198.49
Intrinsic Value
$329.15
+39.7% margin of safety
COMPETITIVE MOAT
↑Targeted Demographic Appeal
Five Below effectively captures the value-seeking, trend-conscious youth demographic. This focus creates strong brand loyalty among its core customers.
↑Unique Product Curation
The company excels at sourcing and presenting a constantly refreshing assortment of trendy, impulse-buy items. This dynamic merchandising keeps the shopping experience novel and exciting.
↑Value Proposition Strength
Offering a wide range of products at consistently low price points creates a compelling value proposition. This attracts a broad customer base, especially in uncertain economic times.
INVESTMENT RISKS
↓Dependence on Discretionary Spending
The company's sales are highly sensitive to consumer discretionary spending. Economic downturns or shifts in consumer priorities could significantly impact revenue.
↓Inventory Management Challenges
Managing a high volume of diverse, trend-driven inventory presents risks. Obsolescence or overstocking can lead to margin erosion and markdowns.
↓Intense Retail Competition
The discount retail sector is highly competitive. Five Below faces pressure from numerous players vying for the same value-conscious consumer.
Base case
FIVE base case valuation
A base case discounted cash flow model for FIVE estimates an intrinsic value of about $329.15 per share, against a current price of $198.49. The model assumes 17.0% annual free cash flow growth, a 10.0% discount rate, and a 22x exit multiple.
Intrinsic Value
$329.15
Margin of safety
+39.7%
Expected annual return
+10.6%
Base case assumptions: 17.0% annual growth, 10.0% discount rate, 22x exit multiple, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the FIVE valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Five Below, Inc. respond.
Open DCF Calculator for FIVECompany Overview
Five Below, Inc. operates as a prominent specialty discount retailer primarily serving the United States market. The company's diverse inventory spans a wide array of personal accessories, from fashionable novelty socks, sunglasses, and jewelry to scarves, gloves, hair accessories, and athletic apparel like tops, bottoms, and t-shirts. Shoppers can also find a comprehensive selection of beauty products, including nail polish, lip gloss, fragrances, and various branded cosmetics. For home and personal spaces, Five Below provides an assortment of items such as lamps, posters, picture frames, cozy fleece blankets, plush toys, pillows, candles, incense, and diverse lighting and novelty décor. This section also includes accent furniture and practical storage solutions. Athletic and recreational interests are covered with sports balls, team merchandise, and fitness essentials like hand weights, jump ropes, and gym balls. The store also boasts a variety of games, from classic board games and puzzles to collectibles and remote-control toys, alongside seasonal outdoor and water-based fun items for pools and beaches. Furthermore, the company caters to technology enthusiasts with accessories for cell phones, tablets, audio devices, and computers, offering cases, chargers, headphones, and related gadgets. Media products, including books, video games, and DVDs, are also available. Creativity is encouraged through a selection of craft activity kits and art supplies like crayons, markers, and stickers. Students can find school essentials such as backpacks, trendy notebooks and journals, novelty pens and pencils, and locker embellishments. For celebrations, Five Below offers party goods, decorations, gag gifts, and greeting cards, encompassing both everyday and special occasion merchandise. A sweet tooth is satisfied with a range of classic and novelty candy bars, movie-sized boxes, seasonal treats, gum, and snack foods, complemented by chilled beverages. Additionally, the retailer stocks a rotating selection of seasonally-themed items for holiday decorating and events. Initially founded as Cheap Holdings, Inc., the company officially adopted the name Five Below, Inc. in August 2002, the same year it was incorporated. Its corporate headquarters are situated in Philadelphia, Pennsylvania.
Financial Metrics — FIVE Stock Valuation Data
Revenue/Share (TTM)
$91.91
FCF/Share (TTM)
$9.14
ROIC (TTM)
9.6%
ROE (TTM)
21.1%
P/FCF
21.7x
EV/EBITDA
15.8x
FCF Yield
4.60%
Debt/Equity
0.86x
Based on trailing twelve-month data, FIVE shows a free cash flow per share of $9.14 and a ROIC of 9.6%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 21.7x and FCF yield of 4.60% are important context metrics when evaluating FIVE's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of FIVE?
Five Below, Inc. currently generates $9.14 in free cash flow per share. At the current price of $198.49, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is FIVE undervalued?
FIVE trades at a P/FCF ratio of 21.7x with a free cash flow yield of 4.60%. This P/FCF is in a moderate range. However, whether FIVE is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value FIVE stock using DCF?
To perform a DCF valuation on Five Below, Inc.: (1) Start with the trailing free cash flow per share ($9.14) as the base, (2) project future FCF growth over 5-10 years based on Discount Stores industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting FIVE's risk profile — with a debt-to-equity of 0.86x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to FIVE?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Five Below, Inc., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Discount Stores trends, then discounting those amounts to today's dollars. FIVE's ROIC of 9.6% shows moderate capital returns.
How does WACC affect FIVE stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For FIVE, with a debt-to-equity ratio of 0.86x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 15.8x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See FIVE PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Consumer Defensive valuationsDCF and P/E value FIVE with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.