Financial Analysis: Revolve Group (NYSE:RVLV) and Five Below (NASDAQ:FIVE)

Five Below (NASDAQ:FIVE) and Revolve Group (NYSE:RVLV) are both consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.

Volatility and Risk

Five Below has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500. Comparatively, Revolve Group has a beta of 1.6, suggesting that its share price is 60% more volatile than the S&P 500.

Valuation and Earnings

This table compares Five Below and Revolve Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Five Below	$4.76 billion	3.01	$358.64 million	$7.92	32.75
Revolve Group	$1.23 billion	1.36	$61.71 million	$1.01	23.15

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

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Five Below and Revolve Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Five Below	2	11	18	1	2.56
Revolve Group	0	6	7	0	2.54

Five Below currently has a consensus target price of $263.20, indicating a potential upside of 1.46%. Revolve Group has a consensus target price of $30.08, indicating a potential upside of 28.64%. Given Revolve Group’s higher probable upside, analysts clearly believe Revolve Group is more favorable than Five Below.

Institutional and Insider Ownership

67.6% of Revolve Group shares are held by institutional investors. 1.0% of Five Below shares are held by company insiders. Comparatively, 42.7% of Revolve Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Five Below and Revolve Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Five Below	8.67%	21.31%	9.19%
Revolve Group	5.54%	13.38%	8.71%

Summary

Five Below beats Revolve Group on 11 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. The company offers range of accessories, which includes novelty socks, sunglasses, jewelry, scarves, gloves, hair accessories, athletic tops and bottoms, and t-shirts, as well as nail polish, lip gloss, fragrance, and branded cosmetics; and personalized living space products, such as lamps, posters, frames, fleece blankets, plush items, pillows, candles, incense, lighting, novelty décor, accent furniture, and related items, as well as provides storage options. It provides assortment of sports balls, team sports merchandise, and fitness accessories comprising hand weights, jump ropes, and gym balls; various games, such as board games, puzzles, collectibles, and toys, including remote control; and summer season sports, which includes pool, beach, and outdoor toys, as well as games and accessories. In addition, the company offers accessories for cell phones, tablets, audio, and computers, as well as cases, chargers, headphones, and other related items; and media products including books, video games, and DVDs. It also provides assortment of craft activity kits, and arts and crafts supplies, such as crayons, markers, and stickers; and school products comprising backpacks, fashion notebooks and journals, novelty pens and pencils, and locker accessories. Further, the company offers party products, which includes party goods, decorations, gag gifts, and greeting cards, as well as every day and special occasion merchandise; assortment of classic and novelty candy bars, movie-size box candy, seasonal-related candy, and gum and snack food products, as well as sells chilled drinks through coolers; and provides seasonally specific items used to celebrate and decorate for events. The company was formerly known as Cheap Holdings, Inc. and changed its name to Five Below, Inc. in August 2002. Five Below, Inc. was incorporated in 2002 and is headquartered in Philadelphia, Pennsylvania.

About Revolve Group

Revolve Group, Inc. operates as an online fashion retailer for millennial and generation z consumers in the United States and internationally. The company operates in two segments, REVOLVE and FWRD. It operates a platform that connects consumers and global fashion influencers, as well as emerging, established, and owned brands. The company offers apparel, footwear, accessories, beauty, and home products from emerging, established, and owned brands, as well as luxury brands through its websites and mobile apps. The company was formerly known as Advance Holdings, LLC and changed its name to Revolve Group, Inc. in October 2018. Revolve Group, Inc. was founded in 2003 and is headquartered in Cerritos, California.