Five Below Inc. (FIVE) is about to show us whether inflation really is pushing more shoppers into discount stores. The company reports third-quarter results Wednesday after the close, and there's reason to think the numbers will look pretty good.

What Wall Street Expects

Analysts are looking for third-quarter revenue of $983.1 million, up from $843.7 million in the same period last year. That would be the sixth straight quarter of beating revenue estimates if Five Below comes in ahead of expectations, which it's done in seven of the last ten quarters overall.

On the earnings side, analysts expect 24 cents per share, down from 42 cents in last year's third quarter. The company has beaten earnings estimates for four consecutive quarters and in seven of the last ten.

Five Below's own guidance calls for third-quarter revenue between $950 million and $970 million, with earnings per share landing somewhere between 12 cents and 24 cents. The analyst consensus sits at the high end of that range.

The Bull Case Gets Louder

Guggenheim analyst John Heinbockel thinks Five Below will beat estimates and raise guidance. He maintained a Buy rating heading into the report and bumped his price target from $165 to $185.

More interesting: Heinbockel argues there's still plenty of room for the stock to run, even after it's up 57% year-to-date. His reasoning comes down to math.

"We still see meaningful, intermediate-term upside potential given the compelling combination of a 15% secular growth algo and modest ~13x EBITDA multiple," Heinbockel said.

The analyst expects "sizable 3Q sales and EBIT beats," though he's quick to note that the third quarter itself isn't the main event. The real story is momentum heading into the all-important fourth quarter.

"The 3Q's significance lies in its entry rate to the all-important 4Q, not in its paltry P&L contribution," he said.

Heinbockel expects strong early fourth-quarter results and guidance, pointing to new products like a Wicked-themed $35 Beauty Fridge, the company's "Ultimate Gift Finder" initiative, and ramped-up marketing efforts. He does caution that next year could see headwinds from tariff effects and tougher year-over-year comparisons.

The Discount Retail Comeback

Freedom Capital Markets Chief Market Strategist Jay Woods highlighted the strength across discount retailers including Five Below, Dollar General (DG), and Dollar Tree Inc. (DLTR) in a recent newsletter. All three report earnings this week.

Of the three, Woods called Five Below "the big winner" based on double-digit revenue growth and stock performance.

"The stock is up 57% year-to-date and leads all of its peers in share performance," Woods said.

The common thread? All three companies are benefiting from "consumer trade downs" as inflation and budget concerns push households toward value retailers.

Other analysts have been raising their price targets recently too:

• Truist: Maintained Hold rating, raised price target from $148 to $168
• Mizuho: Maintained Neutral rating, raised price target from $150 to $160
• UBS: Maintained Buy rating, raised price target from $184 to $204
• Wells Fargo: Maintained Overweight rating, raised price target from $170 to $175

The Data Backs It Up

Beyond the analyst commentary, the foot traffic numbers tell a compelling story. Data from Placer.ai shows visits to Five Below locations were up 13.3% year-over-year in the third calendar quarter.

That crushes the competition. Dollar Tree saw visit growth of just 4.9% over the same period, while Dollar General came in at 4.3%.

The momentum continued through the fiscal third quarter. Visits were up 15.9% year-over-year in August, 10.7% in September, and 19.2% in October.

Store expansion continues to be part of the growth story. Five Below opened 32 new locations in the second quarter, and investors will likely be watching for updates on the rollout across the country.

What Could Move the Stock

The company raised its full-year fiscal 2025 revenue and earnings guidance after second-quarter results. Given the strong visit growth and the stock's impressive run, analysts and investors are probably expecting another raise this time around.

That makes guidance the wild card. If Five Below simply reiterates its current outlook rather than raising it, shares could get volatile in a hurry. Conversely, a bigger-than-expected raise could send the stock even higher despite already trading near its 52-week high.

Where the Stock Stands

Five Below shares traded up 3.8% to $165.00 on Wednesday, sitting comfortably within their 52-week range of $52.38 to $168.85. The stock has gained 57.2% year-to-date in 2025, making it one of the standout performers in retail.

The question now is whether the company can deliver results strong enough to justify that rally and convince investors there's more upside ahead. We'll find out Wednesday afternoon.