| Stock (Symbol) | Stock Price | |
GNC Holdings (GNC) |
$37 |
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| Data is as of | Expected to Report | Sector |
May 30, 2014 |
Jul 21 – Jul 25 |
Food & Necessities |
| Sharek’s Take | ||
 Last quarter GNC (GNC) blamed winter storms for its earnings shortfall. This quarter the company missed estimates again and I’m getting concerned there is an overall slowdown in business. Sales were up only 2% last quarter (due to storms?) but sales this quarter are expected to rise only 5%. GNC does have great management that sells goods through wholesale clubs, drug stores and their own GNC retail stores. It also pays a dividend and buys back stock ($150 million last qtr alone). I think GNC’s Gold Card membership program isn’t as successful as was expected and the company is suffering through stagnant growth. I’m lowering my Fair Value P/E on GNC from 20 to 16, but at 12 times earnings there’s still a solid 35% upside to the company’s 2014 Fair Value. |
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| One-Year Chart | ||
 Last quarter with GNC at $45 I said “Someday we will look back on this P/E of 14 and wonder why we didn’t load up on GNC.” Well now the stock’s $37 so that didn’t work out. This chart looks bad now. The Est LTG just dropped from 17% to 14%. There’s cause for concern that GNC’s days of 20% growth are behind it. |
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| Earnings Table | ||
 Sales growth dropped from 9% 2QtrsAgo to 2% last quarter. Profits rose only 3% due to summer storms keeping customers away.GNC missed lowered estimates by a couple of cents. It also lowered estimates going forward. Annual Profit Estimates have now taken two big hits the last two quarters. These figures need to stabilize. Quarterly profit growth doesn’t look good. Notice future quarter’s just got reduced. It’s Summer now. Cmon. |
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| Fair Value | ||
 I’m taking my Fair Value P/E down from 20 to 16. The stock’s sold for an average of around 16 times earnings since going public in 2011. If things pick up you could see a big move in the stock price. |
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| Ten-Year Chart | ||
 Wow, 7% profit growth this year? That’s not good. The ten-year chart looks very weak right now. Something is wrong here. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
21 of 25 |
GNC might be a slower growth company now, but at 12 times earnings the stock is a tremendous value. Eventually estimates will stop falling and the stock will rise, but who knows when that will be. GNC is ranked 25th in the Growth Portfolio Power Rankings. If the company beats the street, hits 20% profit growth and raises estimates next quarter I may put it in the Aggressive Growth Portfolio. |
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Aggressive Growth Portfolio
N/A |
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