What’s there in Vitamin Shoppe Inc. (NYSE:VSI)’s new trend?


Vitamin Shoppe, Inc. (NYSE:VSI), an omni-channel, specialty retailer and manufacturer of nutritional products, today announced preliminary results for the three months ended April 1, 2017. Total net sales in the first quarter were $316.9 million compared to $336.8 million in the same period of the prior year. Reported fully diluted earnings per share in first quarter 2017 were $0.35, compared to fully diluted earnings per share of $0.59 in first quarter 2016. Results in first quarter 2017 include a $0.7 million (pre-tax), or $0.02 per share, charge associated with the Nutri-Force turnaround, while first quarter 2016 results include approximately $2.5 million (pre-tax), or $0.08 per diluted share, of costs related to strategic initiatives. Excluding these items in both periods, adjusted EPS was $0.37 and $0.67, in first quarter 2017 and first quarter 2016, respectively.

We are going to take a close look at Vitamin Shoppe Inc. (NYSE:VSI) today to get a better sense of the company and its current status, as well as the opportunity it may offer for prospective investors. Today’s focus will be a fundamental evaluation of the stock from top to bottom.

As such, let’s start with the top line: Revenue trends.

Last quarter, the company saw its overall sales move to $304.87M in total revenues. That represents an overall change in revenues, on a quarterly year/year basis, of 0.04%. If we translate that into sequential terms, the company saw sales decline by -0.03% from quarter to quarter.

While revenue analysis gives us a strong sense of changing demand trends in the company?s end market, and how the company is executing in terms of its relationship with potential customers, real shareholder value is only truly created by profitability.

With this in mind, we turn to the company’s bottom line data.

Vitamin Shoppe Inc. (NYSE:VSI) is intriguing when broken down to its core data. The cost of selling goods last quarter was $214.67M, yielding a gross basic income of $90.19M. For shareholders, given the total diluted outstanding shares of 23.55M, this means an overall earnings per share of $(0.50). Note, this compares with a consensus analyst forecast of $0.52 in earnings per share for its next fiscal quarterly report.

Next, let’s look ahead at coming performance based on what analysts are projecting for the company more generally, before closing with a survey of the balance sheet and cash flow.

At present, analysts hold a consensus average recommendation of Hold. This is based on a total of 11 analysts? ratings. While we don’t suggest taking analyst recommendations as face value plans for action in a portfolio, we do think it is important to note where consensus is on a stock to understand what basic assumptions are perhaps already discounted into market pricing of shares of the stock.

As far as price targets, analysts currently have an average target on shares of at $24.11. In addition, if we turn to next year, we see estimates of a fiscal year forecast to bring about 2.23 in total earnings per share. On a median price to earnings ratio basis, that outlook adds up to a valuation of 8.64 times earnings.

So far, we have covered how the company is doing on both the top and bottom line, as well as what professional analysts believe about its core trends and operational and financial performance going forward. However, we would be remiss if we did not also take a quick look at cash flows and the company’s balance sheet to round out our perspective on the name.

As the reader is no doubt aware, for any company, balance sheet health sits at the heart of the company’s capacity to stand up to the demands and obligations incurred by normal and contingent operations, which in turn lies at the core of a company’s ability to retain the faith of investors in the marketplace. For Vitamin Shoppe Inc. (NYSE:VSI), the company presently holds about $2.83M in cash in the coffers. That cash is balanced against about $11M in total current liabilities.

It’s important to consider both a static and dynamic picture, particularly where debt levels are concerned. This means, we need to take into account any trends. In this case, the company?s debt has been $growing. The company also has $756.05M in total assets, balanced by $316.06M in total liabilities, which suggests where this story might go under adverse economic or financial conditions.

As far as cash flows, the company saw a free cash flow last quarter of $6.45M, representing a quarterly net change in cash of $810,000. On a net operating level, the company saw about $15.29M in cash flow.

We will update the interesting story of Vitamin Shoppe Inc. (NYSE:VSI) as new events transpire.