Comparing Five Below (NASDAQ:FIVE) and Big 5 Sporting Goods (NASDAQ:BGFV)

Five Below (NASDAQ:FIVE) and Big 5 Sporting Goods (NASDAQ:BGFV) are both retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, dividends, profitability, risk and valuation.

Analyst Recommendations

This is a summary of recent ratings and price targets for Five Below and Big 5 Sporting Goods, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Five Below	1	11	8	0	2.35
Big 5 Sporting Goods	0	0	0	0	0.00

Five Below currently has a consensus target price of $143.56, indicating a potential upside of 2.61%. Given Five Below’s stronger consensus rating and higher possible upside, equities analysts clearly believe Five Below is more favorable than Big 5 Sporting Goods.

Risk and Volatility

Five Below has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500. Comparatively, Big 5 Sporting Goods has a beta of 1.45, suggesting that its stock price is 45% more volatile than the S&P 500.

Valuation & Earnings

This table compares Five Below and Big 5 Sporting Goods”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Five Below	$3.88 billion	1.99	$253.61 million	$4.94	28.32
Big 5 Sporting Goods	$762.76 million	0.04	-$69.07 million	($4.20)	-0.34

Five Below has higher revenue and earnings than Big 5 Sporting Goods. Big 5 Sporting Goods is trading at a lower price-to-earnings ratio than Five Below, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Five Below and Big 5 Sporting Goods’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Five Below	6.45%	17.13%	7.01%
Big 5 Sporting Goods	-12.14%	-39.67%	-10.70%

Institutional & Insider Ownership

42.0% of Big 5 Sporting Goods shares are held by institutional investors. 1.9% of Five Below shares are held by insiders. Comparatively, 6.7% of Big 5 Sporting Goods 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.

Summary

Five Below beats Big 5 Sporting Goods on 11 of the 14 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 Big 5 Sporting Goods

Big 5 Sporting Goods Corporation operates as a sporting goods retailer in the western United States. Its products include athletic shoes, apparel, and accessories. The company also offers a selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, tennis, golf, and winter and summer recreation, as well as home recreation. It also provides private label items, such as shoes, apparel, camping equipment, fishing supplies, and snow sport equipment. The company sells private label merchandise under its trademarks comprising Golden Bear, Harsh, Pacifica, and Rugged Exposure. It also operates an e-commerce platform under the Big 5 Sporting Goods name. Big 5 Sporting Goods Corporation was founded in 1955 and is headquartered in El Segundo, California.