Shares of Five Below (FIVE, $43.13, up $5.13) are soaring 13% and have traded to a high of $44.35 after the company beat Wall Street’s estimates and raised guidance.
Fourth quarter earnings came in at $0.47 a share on revenue of $212 million versus expectations for $0.45 a share on sales of $208 million. The company guided 1Q earnings in-line with the possibility of a beat.
We profiled Five Below’s earnings in our Weekly Wrap and said the assumed trade was to go short as it is a heavily shorted stock. However, we mentioned if they beat earnings, shares could zoom past $40.
The option premiums were too expensive for us to play as the April 40 calls (FIVE140419C00040000, $3.40, up 1.95) were at $1.45 going into yesterday’s close.
Although these options have easily doubled and have traded up to $4.90, we didn’t like the risk/reward the trade offered.
As far as the market, we waited a little late to go to press as we saw some weakness developing and we wanted to see why. Rumors of geopolitical concerns seem to weighing on the indexes again but as long as support holds, the market should see higher levels in April.
The Dow is down 44 points to 16,323 while the S&P 500 is off 4 points to 1,861. The Nasdaq is off 34 points to 4,200 and the Russell 2000 is declining 15 points to 1,162. The S&P Volatility Index ($VIX, 14.63, up 0.61).
We have a lot to cover inside our Members Area so let’s go see where things are at.