Contrasting Five Below (FIVE) & Walmart (WMT)

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

Institutional and Insider Ownership

29.7% of Walmart shares are held by institutional investors. 2.6% of Five Below shares are held by insiders. Comparatively, 51.1% of Walmart shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.



Dividends

Walmart pays an annual dividend of $2.08 per share and has a dividend yield of 2.5%. Five Below does not pay a dividend. Walmart pays out 47.1% of its earnings in the form of a dividend. Walmart has raised its dividend for 43 consecutive years.

Risk and Volatility

Five Below has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500. Comparatively, Walmart has a beta of 0.53, suggesting that its share price is 47% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Five Below and Walmart, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Five Below 0 6 11 0 2.65
Walmart 0 17 15 0 2.47

Five Below presently has a consensus price target of $94.13, indicating a potential downside of 3.21%. Walmart has a consensus price target of $96.03, indicating a potential upside of 14.64%. Given Walmart’s higher probable upside, analysts plainly believe Walmart is more favorable than Five Below.

Profitability

This table compares Five Below and Walmart’s 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%
Walmart 1.77% 17.16% 6.63%

Earnings and Valuation

This table compares Five Below and Walmart’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Five Below $1.28 billion 4.23 $102.45 million $1.79 54.33
Walmart $500.34 billion 0.50 $9.86 billion $4.42 18.93

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

Summary

Walmart beats Five Below on 9 of the 17 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 Walmart

Walmart Inc. engages in the retail and wholesale operations in various formats worldwide. The company operates through three segments: Walmart U.S., Walmart International, and Sam's Club. It operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, discount stores, drugstores, and convenience stores; membership-only warehouse clubs; e-commerce Websites, such as walmart.com, jet.com, hayneedle.com, shoes.com, moosejaw.com, modcloth.com, bonobos.com, and samsclub.com; and mobile commerce and voice-activated commerce applications. The company offers grocery products, including meat, produce, natural and organics, deli and bakery, dairy, frozen foods, alcoholic and nonalcoholic beverages, floral and dry grocery, as well as consumables, such as health and beauty aids, baby products, household chemicals, paper goods, and pet supplies; and health and wellness products. It also provides electronics, cameras and supplies, photo processing services, wireless, movies, music, video games, and books; stationery, automotive, hardware and paint, sporting goods, and outdoor living and horticulture; apparel for women, girls, men, boys, and infants, as well as shoes, jewelry, and accessories; and home furnishings, housewares and small appliances, bedding, home decor, toys, fabrics, crafts, and seasonal merchandise, as well as brand name merchandise. In addition, the company offers fuel and financial services and related products, including money orders, prepaid cards, wire and money transfers, check cashing, and bill payment, as well as consumer credit services. It operates 11,700 stores and various e-commerce Websites under the 65 banners in 28 countries. The company was formerly known as Wal-Mart Stores, Inc. and changed its name to Walmart Inc. in February 2018. Walmart Inc. was founded in 1945 and is based in Bentonville, Arkansas.

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