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FIVE, Five Below

Department & General Merchandise Stores retail

Five Below is a specialty value retailer offering trend-right, high-quality products loved by the kid and the kid in all of us.

We purchase products in reaction to existing marketplace trends and, hence, refer to our products as "trend-right."

We use the term "dynamic" merchandise to refer to the broad range and frequently changing nature of the products we display in our stores.

Latest annual: FY2026 10-K

FIVE · Five Below

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2026

$4.8B

+22.9% YoY · 19% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $5.1B 5-yr avg $3.6B

Gross margin 37% 5-yr avg 36%

Operating margin 11.0% 5-yr avg 10.7%

ROIC 25% 5-yr avg 23%

Owner-earnings margin 10% 5-yr avg 8%

Free cash flow margin 10% 5-yr avg 4%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What moves the needle: Gross margin has run about 36% and operating margin about 11% through the cycle, a solid spread between what it charges and what the product costs to make. Inventory runs near 16% of sales, so how fast it turns back into cash — and the risk of writing it down when demand softens — sits alongside the margin. On its own account, the filing leans hardest on pricing power & competition, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has run high across the record (median 25%, above 15% in 9 of 9 years). Owner earnings agree: roughly 9% of revenue reaches owners as cash, consistently. Whether these returns reflect real pricing power or an accounting artifact is the judgment the 10-K is for.

Every line is arithmetic on the company's filings, shown in full in the sections below.

The record

Ten years of arithmetic, read across the cycle.

The record, 2018–2026

realized figures from each filing · older years to the left

2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	2026’26	TTMTTMMay 2026
										Income statement
$1.3B	$1.6B	$1.8B	$2.0B	$2.8B	$3.1B	$3.6B	$3.9B	$4.8B	$5.1B	RevenueRevenue
36%	36%	36%	33%	36%	36%	36%	35%	36%	37%	Gross marginGross mgn
24%	24%	25%	25%	20%	21%	21%	22%	22%	22%	SG&A / revenueSG&A/rev
$157M	$187M	$217M	$155M	$380M	$345M	$386M	$324M	$457M	$561M	Operating incomeOp. inc.
12.3%	12.0%	11.8%	7.9%	13.3%	11.2%	10.8%	8.4%	9.6%	11.0%	Operating marginOp. mgn
$102M	$150M	$175M	$123M	$279M	$262M	$301M	$254M	$359M	$441M	Net incomeNet inc.
36%	22%	21%	19%	24%	25%	25%	25%	25%	25%	Effective tax rateTax rate
										Cash flow & returns
$167M	$184M	$187M	$366M	$328M	$315M	$500M	$431M	$586M	$681M	Operating cash flowOp. cash
$33M	$55M	$55M	$69M	$85M	$106M	$131M	$167M	$192M	$197M	DepreciationDeprec.
$15M	($33M)	($55M)	$164M	($62M)	($76M)	$50M	($6M)	$984K	$14M	Working capital & otherWC & other
$68M	$114M	$212M	$200M	$288M	$252M	$335M	$324M	$175M	$176M	CapexCapex
5.3%	7.3%	11.5%	10.2%	10.1%	8.2%	9.4%	8.4%	3.7%	3.5%	Capex / revenueCapex/rev
$134M	$129M	$132M	$297M	$243M	$209M	$369M	$263M	$412M	$505M	Owner earningsOwner earn.
10.5%	8.3%	7.2%	15.1%	8.5%	6.8%	10.4%	6.8%	8.6%	9.9%	Owner earnings marginOE mgn
$100M	$70M	($25M)	$166M	$40M	$63M	$165M	$107M	$412M	$505M	Free cash flowFCF
7.8%	4.5%	−1.4%	8.4%	1.4%	2.0%	4.6%	2.8%	8.6%	9.9%	Free cash flow marginFCF mgn
$0	$2M	$37M	$13M	$60M	$40M	$81M	$40M	$0	—	BuybacksBuybacks
29%	40%	31%	20%	27%	25%	21%	16%	23%	25%	ROICROIC
22%	24%	23%	14%	25%	19%	19%	14%	16%	19%	Return on equityROE
22%	24%	23%	14%	25%	19%	19%	14%	16%	19%	Retained to equityRetained/eq
										Balance sheet
$245M	$337M	$262M	$410M	$342M	$399M	$460M	$529M	$932M	$1.1B	Cash & investmentsCash+inv
$187M	$244M	$324M	$281M	$455M	$528M	$585M	$660M	$847M	$813M	InventoryInvent.
$73M	$104M	$130M	$139M	$196M	$221M	$256M	$260M	$368M	$352M	Accounts payablePayables
$114M	$140M	$194M	$143M	$259M	$307M	$328M	$399M	$478M	$462M	Operating working capitalOper. WC
$479M	$642M	$666M	$755M	$905M	$1.1B	$1.2B	$1.4B	$1.9B	$2.1B	Current assetsCur. assets
$164M	$253M	$351M	$436M	$587M	$603M	$716M	$756M	$954M	$983M	Current liabilitiesCur. liab.
2.9×	2.5×	1.9×	1.7×	1.5×	1.8×	1.7×	1.8×	2.0×	2.1×	Current ratioCurr. ratio
$696M	$952M	$2.0B	$2.3B	$2.9B	$3.3B	$3.9B	$4.3B	$4.9B	$5.1B	Total assetsAssets
$459M	$615M	$760M	$882M	$1.1B	$1.4B	$1.6B	$1.8B	$2.2B	$2.3B	Shareholders’ equityEquity
1.3%	0.8%	0.7%	0.5%	0.9%	0.8%	0.5%	0.4%	0.7%	0.6%	Stock comp / revenueSBC/rev
										Per share
55.6M	56.2M	56.2M	56.1M	56.3M	55.7M	55.6M	55.2M	55.4M	55.6M	Shares out (diluted)Shares
$23.01	$27.74	$32.88	$35.00	$50.59	$55.19	$63.99	$70.28	$85.94	$91.34	Revenue / shareRev/sh
$1.84	$2.66	$3.12	$2.20	$4.95	$4.69	$5.41	$4.60	$6.47	$7.92	EPS (diluted)EPS
$2.41	$2.30	$2.35	$5.29	$4.32	$3.75	$6.63	$4.77	$7.43	$9.09	Owner earnings / shareOE/sh
$1.79	$1.25	$-0.45	$2.96	$0.71	$1.13	$2.96	$1.93	$7.43	$9.09	Free cash flow / shareFCF/sh
$1.22	$2.02	$3.78	$3.57	$5.12	$4.52	$6.02	$5.87	$3.15	$3.16	Cap. spending / shareCapex/sh
$8.25	$10.94	$13.53	$15.73	$19.90	$24.43	$28.50	$32.79	$39.56	$41.59	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	8-yr	5-yr
Revenue / share	+17.9%/yr	+19.7%/yr
Owner earnings / share	+15.1%/yr	+7.0%/yr
EPS	+17.0%/yr	+24.1%/yr
Capital spending / share	+12.6%/yr	−2.5%/yr
Book value / share	+21.6%/yr	+20.3%/yr

The record, charted

FY2018–2026

Each measure over its full record; the current point and the worst year marked.

Share count

55Mpeak FY2022

ROIC

23%low FY2025

Gross margin

36%low FY2021

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$412Mowner earningsvs.$359Mnet incomelow FY2019

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetained

Each year's operating cash, by what management did with it: the mix, and how it drifts.

FY2018FY2026

Owner-earnings bridge

FY2022–FY2026cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2026 the business turned $359M of profit into $412M of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.

Reported net income$359M

Owner earnings$412M · 9% of revenue

	FY2026	FY2025	FY2024	FY2023	FY2022
Reported net income	$359M	$254M	$301M	$262M	$279M
Depreciation & amortizationnon-cash charge added back	+$192M	+$167M	+$131M	+$106M	+$85M
Stock-based compensationreal costnon-cash, but a real cost	+$35M	+$16M	+$18M	+$24M	+$26M
Working capital & othertiming of cash in and out, other non-cash items	+$984K	−$6M	+$50M	−$76M	−$62M
Cash from operations	$586M	$431M	$500M	$315M	$328M
Maintenance capital expenditurethe spending needed just to hold position and volume	−$175M	−$167M	−$131M	−$106M	−$85M
Owner earnings	$412M	$263M	$369M	$209M	$243M
Growth capital expenditurediscretionary; spent to get bigger, not to stand still	—	−$157M	−$204M	−$146M	−$203M
Free cash flow	$412M	$107M	$165M	$63M	$40M
Owner-earnings marginowner earnings ÷ revenue	9%	7%	10%	7%	9%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $35M), owner earnings is nearer $377M.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2026 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? —

No meaningful interest burden

Little or no interest expense reported

What this means
Little or no interest expense reported, the business isn't leaning on lenders to operate.
How heavy is the debt, net of cash? +$932M

Net cash

Cash $724M + ST investments $209M − debt $300K

What this means
Cash and short-term investments exceed every dollar of debt by $932M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? —

Not enough data

What this means
The filing data didn't include the inputs for this check.

Is it a good business?

Return on invested capital 25%

Very high (≥25%) through the cycle

9-yr median, range 16%–40%; 23% latest = NOPAT $341M ÷ invested capital $1.5B

Industry peers: median 18%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 9 years (it ran 23% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 9%

Solid through the cycle

9-yr median margin, range 7%–15%; latest $412M = operating cash $586M − maintenance capex $175M

Industry peers: median 6%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 9% of revenue this year, a 9% median across 9 years. Treating stock comp as the real expense it is (less $35M of SBC) leaves $377M.
Are earnings backed by cash? 1.64×

Cash-backed

Cash from ops $586M ÷ net income $359M

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 0%

Reinvests most of it

Dividends + buybacks $0 ÷ Owner Earnings $412M

What this means
Of $412M Owner Earnings, $0 (0%) went back to shareholders, $0 dividends, $0 buybacks. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 0.91×

Maintaining

Capex $175M ÷ depreciation $192M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 5 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $4.8B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Pass

Current ratio ≥ 2× · 2.01×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Pass

Debt ≤ working capital · $300K vs $963M WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Pass

A profit every year (9-yr record) · no losses

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Miss

Uninterrupted dividends · none paid

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Pass

Earnings +33% over the record · +114%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $5.51/share (latest year $6.49), the averaged base the calculator's gate runs on, and book value is $39.66/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2018–2026

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 9 of 9

What this means
Never lost money over the record, the earnings stability Graham insisted on.
Operating margin 12% → 10% (3-yr avg ends)

What this means
Through the cycle the operating margin slipped — about 12% early to 10% lately, median 11% — competition or costs are biting in.
Owner earnings growth +12%/yr

What this means
Owner earnings grew about 12% a year over the record.
Worst year 2021 · 7.9% op. margin

What this means
Stayed profitable even in its hardest year, the resilience that survives recessions.
Share count −0.0%/yr

What this means
Roughly flat share count, little dilution, little buyback.

Does AI threaten the moat?

Moderate contestability

AI is likely to reshape costs and some products here without clearly contesting or sparing the core moat; how the company itself frames it is the tell.

In its own filing Named as a competitive risk

Its FY2026 10-K names artificial intelligence as a competitive threat.

“Our competitors or other third parties may incorporate AI into their businesses more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.”

The question is whether a moat the record shows as durable outlasts a technology that lowers the cost of part of what the firm sells. The durability is read in the record above, the filing's own framing of AI beside it; the industry label decides nothing on its own.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, May 2, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$2.1B

Cash & short-term investments$1.1B
Inventory$813M
Other current assets$135M

Current liabilities$983M

Accounts payable$352M
Other current liabilities$631M

Current ratio2.10×all current assets ÷ what's due · Graham looked for 2×

Quick ratio1.27×stricter: inventory excluded

Cash ratio1.13×strictest: cash alone against what's due

Working capital$1.1Bthe cushion left after near-term bills

Revenue, latest quarter vs. a year ago+32.5%the freshest read on whether the business is still growing

Current ratio, recent quarters1.6× → 2.1×

Deeper floors

Tangible book value$2.3Bequity stripped of goodwill & intangibles

Net current asset value($681M)Graham's net-net: current assets less all liabilities

Debt incl. operating leases$2.0B$2.0B of it operating leases; with finance leases, “total fixed claims” below reaches $2.0B (annual-report basis)

From the company's latest filing.

Lease obligations

the lease note, SEC EDGAR →

Debt by another name. What the business owes on the property, aircraft, stores and equipment it rents rather than owns is a fixed claim due on a schedule; added back to the debt, it is the true leverage. That ladder, and what it adds to the debt on the page above.

'26$400M

'27$383M

'28$358M

'29$325M

'30$280M

later$702M

Lease payments by year, scaled to the largest; “later” is everything beyond year five, shown apart. These are the contractual cash payments, before the interest the filing imputes back out to the balance-sheet liability.

Due in the next 12 months$400Ma fixed cash payment, owed whether or not the business has a good year

Total lease payments$2.4Bevery year plus the tail, undiscounted: the full cash the leases will take

On the balance sheet$2.0Bthe present value of those payments, the recognised lease liability

True leverage: debt plus leases

On-balance-sheet debt$300K

Lease obligations (present value)$2.0B

Total fixed claims on the business$2.0B

Counting the leases the way Buffett does, the fixed claims on this business come to $2.0B, of which the leases are 100%, more than the debt itself. The lease wall above and the debt schedule together are the calendar of what must be paid, and when.

Lease ladder read from the ASC 842 tags in the company’s Jan 31, 2026 annual report and reconciled: the yearly buckets sum to the undiscounted total, which less the imputed interest equals the balance-sheet liability; a ladder that doesn’t tie out is withheld.

How the cash was used, 2018–2026

Over the record, the business generated $3.1B of operating cash; how management split it reads as a reinvestor, most operating cash is plowed back into the business.

Reinvested$2.0B · 64%
Buybacks$272M · 9%
Retained (debt / cash)$824M · 27%

Returned to owners$272M
12% of the owner earnings the business produced over the span, $0 as dividends and $272M as buybacks.
Source of fundingOperating cash
Operating cash covered reinvestment and returns; over the span cash and short-term investments rose $869M.
Average price paid for buybacks$143.57
Across the years where the filing reports a share count, 2M shares were bought for $232M, about $143.57 each. Year to year the price paid ranged from $91.10 (2019) to $162.76 (2022); its heaviest year, 2024, paid $159.69 ($81M).
Net change in share count0.1%
The diluted count barely moved (56M to 56M): buybacks roughly offset the stock issued to staff.
Dividend record—
No dividend line was reported in the filing data over the span; the record here neither confirms nor rules out a payout.
Return on what it retained12%
Of the earnings it kept rather than paid out ($1.7B over the span), annual owner earnings (first three years vs last three) grew $216M, so each retained $1 added about 0.12 of yearly owner earnings. Buffett's test, run on owner earnings instead of market value.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid.

Insider ownership1%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
Stock-based compensation$35M
The slice of the business handed to employees in shares this year, 1% of revenue, equal to 8% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Five Below is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2018–2026.

None of the 4 tests turned up a mark; each came back clean. A clean panel says only that these particular ways of being wrong are not written into the record.

Each test came back clean

Is it less profitable than it was?
Did the share count rise anyway?
Did reported profit become cash?
Did receivables and inventory outpace sales?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

What an owner would ask, FY2026

read the 10-K →

Which reported numbers are a judgment call?
Management names Income taxes, Inventory as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Department & General Merchandise Stores

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
DGDollar General Corporation	$42.7B	31%	8.4%	18%	6%
BJBJ's Wholesale	$21.5B	18%	3.7%	24%	3%
DLTRDollar Tree Inc.	$19.4B	31%	8.3%	14%	5%
BURLBurlington Stores	$11.5B	42%	5.9%	23%	6%
DDSDillard's	$6.5B	37%	8.2%	29%	8%
PSMTPriceSmart Inc.	$5.3B	15%	4.3%	13%	3%
FIVEFive Below	$4.8B	36%	11.2%	25%	9%
OLLIOllie's Bargain	$2.6B	40%	11.6%	14%	8%
Group median	—	34%	8.2%	21%	6%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Five Below has delivered.

Today’s price $

Through the cycle, Five Below earns about $407M on its 8.5% median owner-earnings margin. This year’s 8.6% margin runs in line with that. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($407M) Net of stock comp (−$30M)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’22→’26+11%/yr

Owner-earnings growth · ’18→’26+15%/yr

Owner-earnings yield—

P/E (3-yr earnings ’24–’26)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Owner earnings $505M on 55M shares outstanding, per the 10-Q cover, as of 2026-06-03; net cash $1.1B. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh FIVE against another business →

The owners of FIVE: the meeting and the votes →

Cite: Owner Scorecard, "Five Below (FIVE), the owner's record," https://ownerscorecard.com/c/FIVE, data as of 2026-07-09.

Manual order: ← FITB its page in the Manual FIVN →

Industry order: ← DLTR the Department & General Merchandise Stores chapter KSS →