Vitamin Shoppe (VSI) has had a great run. In a little over three years the stock has gone from $20 to $65 — before falling back down to the low-$50s after it reported last quarter’s earnings. VSI has been on my radar since the $20s, let’s take a look at the stock and see if its now at a good point to get in.
One Year Chart
Oh, here’s what went wrong. Profit growth was only 5% last quarter. Hurricane Sandy hurt sales, as some stores had to be shut down for a little while. But GNC had a solid quarter during that same storm. Truth be told, VSI needed to come down anyway. When the stock was $65 the P/E was 27. That’s high for this company. Now with a 22 P/E the stock’s reasonable.
2013 estiamtes only dropped by a nickel after last quarter’s results came out. That’s not much of a fall, no biggie. The estimated Long Term Growth Rate fell from 19% to 17%. Profit growth is expected to be 15% the next two quarters. Same store dales rose 5% last quarter, a solid showing considering the storm.
Fair Value
I feel VSI is worth 18 times earnings. My Fair Value P/E on GNC is 18 and GNC is a better stock. Even now after the fall VSI is still a little high.
Sharek’s Take
VSI is a stock I would look at if the market were to fall and I wanted to collect a couple more growth stocks. VSI almost always beats the street and ups estimates — that’s a good trait — and that’s the main reason the stock’s been such a success (that and profit growth of course). But still, this isn’t expected to be a 20% grower in the long-term, so there’s no reason to rush right in. Just sit and wait and if we get our target price we can get in.
View the Earnings Table here.View the Ten Year Chart here.
