GNC

GNC Holdings Inc

Consumer


Presented:05/31/2013
Price:$45.03
Cap:$4.43B
Current Price:$0.06
Cap:$0.01B

Presented

Date05/31/2013
Price$45.03
Market Cap$4.43B
Ent Value$5.35B
P/E Ratio17.19x
Book Value$8.56
Div Yield1.5%
Shares O/S98.32M
Ave Daily Vol1,730,000
Short Int10.98%

Current

Price$0.06
Market Cap$0.01B
GNC Holdings, Inc. operates as a specialty retailer of health and wellness products. It operates through three segments: Retail, Franchise, and Manufacturing/Wholesale. The company’s products include vitamins, minerals, and herbal supplement products, as well as sports nutrition products, diet products, and other wellness products. It also manufactures its branded products for various third parties. The company sells its products under GNC proprietary brands, including Mega Men, Ultra Mega, Total Lean, Pro Performance, and Pro Performance AMP, as well as under third-party brands. As of December 31, 2012, it had approximately 8,100 locations, including 6,100 retail locations in the United States; and franchise operations in 54 countries. The company sells its products through company-owned domestic retail stores, domestic and international franchise activities, third-party contract manufacturing, e-commerce, and corporate partnerships. It also offers its products at GNC.com, LuckyVitamin.com, and drugstore.com. GNC Holdings, Inc. was founded in 1935 and is headquartered in Pittsburgh, Pennsylvania.

Highlights

The presenter is interested in GNC on the long side because he sees the potential for the company to beat the Street’s earnings estimates and comp well in the back half of 2013; despite a credible bear case, its multiple could expand because it has contracted and reflects relatively more concern than other businesses with similar growth profiles. He reviewed both the bear and bull cases on GNC as follows, and explained why he believes the company’s shares could be worth $56 over the next ~12 months (16x his 2014 EPS estimate of $3.50, vs. the Street at $3.35):

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Idea Discussion

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