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Five Below, Inc. (FIVE) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Five Below, Inc. (FIVE)

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Intrinsic Value (DCF)

Current$198.04
→
Intrinsic$26.70
-87%
$8.66$26.70$60.94
Current price reflects execution expectations above 20% growth — not unreasonable for quality businesses.
Range: Bear $9 → Bull $61. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $61).
Discount ↓Growth →16%18%20%22%
8%$39$45$51$58
10%$19$22$27$31
12%$7$10$13$17
14%$0$2$5$7

Bull Case

  • Bull case ($61) with 24% growth, 9% discount rate

Bear Case

  • Bear case ($9) implies 96% downside at 16% growth, 12% discount
  • Trading 87% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($61) — requires exceptional execution
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5-Year Free Cash Flow Projection

Year 1$127.98M
Year 2$153.58M
Year 3$184.30M
Year 4$221.16M
Year 5$265.39M
Terminal$3.91B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$106.65MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is FIVE stock undervalued or overvalued?
🔴 OVERVALUED

FIVE trades at $198.04 vs. our DCF-derived intrinsic value of $26.70, implying -87% downside. Using a 10.0% WACC and 20.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($55.38) suggests limited upside.

What is FIVE's intrinsic value?

Using a 5-year DCF model: Base FCF of $107M, projected at 20.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $1.65B net debt and dividing by 0.06B shares: Bear $7.22 | Base $26.70 | Bull $55.38. Current price $198.04 implies -87% to base case.

How is FIVE's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($3.12B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.