GNC (GNC) and Vitamin Shoppe (VSI) Critical Survey

GNC (NYSE: GNC) and Vitamin Shoppe (NYSE:VSI) are both small-cap retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Profitability

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This table compares GNC and Vitamin Shoppe’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
GNC -6.07% -120.93% 4.91%
Vitamin Shoppe -21.39% 3.13% 1.55%

Institutional and Insider Ownership

59.7% of GNC shares are owned by institutional investors. Comparatively, 89.0% of Vitamin Shoppe shares are owned by institutional investors. 1.9% of GNC shares are owned by company insiders. Comparatively, 1.1% of Vitamin Shoppe shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility and Risk

GNC has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500. Comparatively, Vitamin Shoppe has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500.

Valuation & Earnings

This table compares GNC and Vitamin Shoppe’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
GNC $2.45 billion 0.13 -$148.85 million $1.35 2.86
Vitamin Shoppe $1.18 billion 0.09 -$252.15 million $0.39 11.15

GNC has higher revenue and earnings than Vitamin Shoppe. GNC is trading at a lower price-to-earnings ratio than Vitamin Shoppe, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings for GNC and Vitamin Shoppe, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
GNC 3 3 0 0 1.50
Vitamin Shoppe 2 4 0 0 1.67

GNC presently has a consensus target price of $7.30, suggesting a potential upside of 89.12%. Vitamin Shoppe has a consensus target price of $4.95, suggesting a potential upside of 13.79%. Given GNC’s higher possible upside, analysts clearly believe GNC is more favorable than Vitamin Shoppe.

Summary

GNC beats Vitamin Shoppe on 9 of the 13 factors compared between the two stocks.

GNC Company Profile

GNC Holdings, Inc. is a specialty retailer of health, wellness and performance products, which include protein, performance supplements, weight management supplements, vitamins, herbs and greens, wellness supplements, health and beauty, food and drink and other general merchandise. The Company’s operations consist of purchasing raw materials, formulating and manufacturing products and selling the finished products. It operates in three segments: U.S. and Canada, International and Manufacturing/Wholesale. Its U.S. and Canada segment generates revenues primarily from sales of products to customers at its Company-owned stores in the United States, Canada and Puerto Rico, through its Websites, GNC.com and LuckyVitamin.com. Its International segment generates revenue primarily to its international franchisees. Its Manufacturing/Wholesale segment comprises its manufacturing operations in South Carolina and its wholesale partner relationships.

Vitamin Shoppe Company Profile

Vitamin Shoppe, Inc. (VSI) is a multi-channel specialty retailer and contract manufacturer of vitamins, minerals, herbs, specialty supplements, sports nutrition, and other health and wellness products. The Company operates through three segments: retail, direct and manufacturing. The retail segment includes Vitamin Shoppe, Super Supplements and Vitapath retail store formats. The direct segment sells its products directly to consumers through the Internet, primarily at www.vitaminshoppe.com. The manufacturing segment provides custom manufacturing and private labeling of vitamin, mineral and supplement products, and develops and markets its own branded products for both sales to third parties and for the VSI product assortment. As of December 31, 2016, it marketed approximately 900 brands, as well as its own brands. As of December 31, 2016, it operated 775 stores located in 45 states, the District of Columbia and Puerto Rico, primarily located in retail centers and standalone locations.

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