Billionaire Steve Cohen Gets Nutritious: GNC Holdings Inc (GNC) and More

As far as recent activities, earnings from earlier this month do bode well for GNC. The vitamin retailer posted EPS of $0.50 for the fourth quarter, up from $0.35 for the same quarter last year and beating consensus estimates of $0.46. At the same time, guidance was also upped, where GNC now expects to see fiscal 2013 revenues up 10% and earnings to come in between $2.75 and $2.80 per share. Analysts were previously only expecting EPS of $2.72 for 2013. The company also upped its it dividend by 36% and now pays a dividend yield of 1.4%

Let’s stack up the two major vitamin retailers even more. The growth metrics for the two, GNC and Vitamin Shoppe, is impressive, with robust five-year growth rates across the board…

• 5-Yr. Historical Revenue Growth 7%
• 5-Yr. Historical Earnings Growth 28%
• 5-Yr. Historical Cash Flow Growth 20%

• 5-Yr. Historical Revenue Growth 10%
• 5-Yr. Historical Earnings Growth 42%
• 5-Yr. Historical Cash Flow Growth 25%

Taking growth a step further, let’s take a look at the expected EPS growth for the two:

• GNC 18.5%
• Vitamin Shoppe 17.5%

Don’t be fooled. Both GNC and Vitamin Shoppe have solid future expected growth, but which stock is the better buy? GNC is the better ‘growth at a reasonable price’ opportunity…

• GNC 0.8
• Vitamin Shoppe 1.7

So why invest in GNC? Besides its leading market share and presence, the company is a great growth story and it’s cheap. GNC is trading at 1.2 times the S&P 500’s P/E, whereas its five year average is around 1.35 times. Assuming GNC’s shares will come more in line with its historical average, thanks in part to a rise in consumer spending and employment, its price to earnings ratio should be 20.25x. Meaning the potential upside for the stock could be around 33% (check out the recent insider purchases at GNC).

The article Billionaire Steve Cohen Gets Nutritious originally appeared on Fool.com and is written by Marshall Hargrave.

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