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Bear of the Day: Vitamin Shoppe (VSI)

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This earnings season marked a bit of a turnaround for a number of companies in the retail world. Several firms here seem to have finally hit bottom and saw their share prices jump in the past few weeks.

However, not every retail name has been able to turn things around, as several still face an uncertain outlook thanks to intense competition and uncertain growth opportunities. Some have even struggled to beat subdued earnings estimates, and shareholders have paid the price. A great example of this trend is with Vitamin Shoppe (VSI - Free Report) .

VSI in Focus

Like many retail stocks lately, VSI has been in trouble. A more competitive market and intense online pressures have made for some serious headwinds for investors in this stock lately. And if that wasn’t enough, VSI also struggled in its most recent earnings report too.

The company posted earnings of 55 cents per share compared to expectations of 59 cents, a miss of nearly seven percent. While an earnings miss is always bad, it is especially awful news in this environment, as numerous retail companies have made this the quarter to surge back, leaving VSI in the dust. And what is even worse, is that analysts have been ratcheting down expectations for VSI’s future quarters, slashing the consensus estimate in the process.

Recent Estimates

In just the past month, six estimates have gone lower for the current quarter compared to zero higher, while we have seen eight go lower for the full year compared to, once again, zero higher. But it hasn’t just the been the agreement among analysts that is worrisome, as the magnitude of the adjustments has also been pretty intense.

In fact, the current quarter consensus estimate has fallen by over 14% in the last month, while the full year and next year figures are down more than 6.5% each in the same time period too. Clearly, analysts believe that more pain could be ahead for VSI, and that at least in the earnings picture, things aren’t expected to turn around any time soon.

VITAMIN SHOPPE Price, Consensus and EPS Surprise

VITAMIN SHOPPE Price, Consensus and EPS Surprise | VITAMIN SHOPPE Quote

No wonder shares of VSI currently have a Zacks Rank #5 (Strong Sell) and why we are looking for this company to continue its bearish run in the months ahead.

Other Choices

Clearly, VSI is a stock that you want to stay far away from in the near future, but what are some ones you should put in your portfolio instead? Well these days, it might be a good idea to take a closer look at thedepartment store space, and in particular, J.C. Penney ( (JCP - Free Report) or Macy’s (M - Free Report) .

Both of these companies were recently upgraded into ‘Buy’ territory from hold, while their fundamental scores are impressive too. So, consider this corner of the market for continued gains, and stay away from VSI until it is finally able to turn things around and get out of this slump.

If anything, VSI may be an interesting short candidate. To learn more about shorting stocks, make sure to check out our podcast below on the topic:

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