Reviewing Five Below (FIVE) and Big Lots (BIG)

Five Below (NASDAQ: FIVE) and Big Lots (NYSE:BIG) are both retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their risk, analyst recommendations, institutional ownership, earnings, valuation, dividends and profitability.

Profitability

This table compares Five Below and Big Lots’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Five Below 8.64% 26.59% 16.99%
Big Lots 3.23% 28.85% 10.62%

Earnings & Valuation

This table compares Five Below and Big Lots’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Five Below $1.28 billion 4.28 $102.45 million $1.79 54.89
Big Lots $5.27 billion 0.31 $189.83 million $4.45 9.14

Big Lots has higher revenue and earnings than Five Below. Big Lots is trading at a lower price-to-earnings ratio than Five Below, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Five Below has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500. Comparatively, Big Lots has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500.

Dividends

Big Lots pays an annual dividend of $1.20 per share and has a dividend yield of 3.0%. Five Below does not pay a dividend. Big Lots pays out 27.0% of its earnings in the form of a dividend. Big Lots has raised its dividend for 3 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Five Below and Big Lots, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Five Below 0 6 11 0 2.65
Big Lots 0 8 8 0 2.50

Five Below presently has a consensus target price of $93.13, indicating a potential downside of 5.23%. Big Lots has a consensus target price of $51.86, indicating a potential upside of 27.54%. Given Big Lots’ higher probable upside, analysts plainly believe Big Lots is more favorable than Five Below.

Summary

Big Lots beats Five Below on 8 of the 15 factors compared between the two stocks.

About Five Below

Five Below, Inc. operates as a specialty value retailer in the United States. It offers accessories, including novelty socks, sunglasses, jewelry, scarves, gloves, hair accessories, athletic tops and bottoms, and T-shirts, as well as beauty products comprising nail polish, lip gloss, fragrance, and branded cosmetics; and items used to complete and personalize living space, including glitter lamps, posters, frames, fleece blankets, plush items, pillows, candles, incense, lighting, novelty décor, and related items, as well as provides storage options for the customers room. The company also provides sport balls; team sports merchandise and fitness accessories, such as hand weights, jump ropes, and gym balls; games, including name brand board games, puzzles, collectibles, and toys; and pool, beach and outdoor toys, games, and accessories. In addition, it offers accessories, such as cases, chargers, headphones, and other related items for cell phones, tablet, audio, and computers; books, video games, and DVDs; craft activity kits; arts and crafts supplies that consist of crayons, markers, and stickers; and trend-right items for school comprising backpacks, fashion notebooks and journals, novelty pens and pencils, locker accessories, and everyday name brand items. Further, the company provides party goods, decorations, gag gifts, and greeting cards, as well as every day and special occasion merchandise products; assortment of classic and novelty candy bars, movie-size box candy, seasonal-related candy, and gum and snack food; chilled drinks through coolers; and seasonally-specific items used to celebrate and decorate for events. It primarily serves teen and pre-teen customers. As of February 3, 2018, it operated 625 stores in 32 states. The company was formerly known as Cheap Holdings, Inc. and changed its name to Five Below, Inc. in August 2002. Five Below, Inc. was founded in 2002 and is headquartered in Philadelphia, Pennsylvania.

About Big Lots

Big Lots, Inc., through its subsidiaries, operates as a community retailer in the United States. The company offers products under various merchandising categories, such as furniture category that includes upholstery, mattress, case goods, and ready-to-assemble departments; seasonal category, which comprises Christmas trim, lawn and garden, summer, and other holiday departments; soft home category that consists of fashion and utility bedding, bath, window, decorative textile, home organization, area rugs, home décor, and frames departments; and food category that includes beverage and grocery, candy and snacks, and specialty foods departments. It also provides merchandise under the consumables category, which comprises health, beauty and cosmetics, plastics, paper, chemical, and pet departments; hard home category, including small appliances, table top, food preparation, stationery, greeting cards, and home maintenance departments; and electronics, toys, and accessories category consisting of electronics, toys, jewelry, and hosiery departments. As of February 3, 2018, it operated 1,416 stores in 47 states. Big Lots, Inc. was founded in 1967 and is headquartered in Columbus, Ohio.

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