On Sep 28, we issued an updated research report on Pittsburgh, PA-based GNC Holdings, Inc. (GNC - Analyst Report) , a leading global specialty retailer of products for health and wellness, including vitamins, minerals, herbal supplement, sports nutrition and diet. The company currently carries a Zacks Rank #3 (Hold).
GNC Holdings’ international business has been a key driver of growth at the company in recent years. Management expects to continue capitalizing on international revenue growth opportunities through the addition of franchise stores in existing markets, expansion into new high-growth markets, and growth of product distribution in both existing and new markets.
During the last reported second quarter of 2016, the company’s international revenues suffered a decline. In an effort to recover from the situation, management is currently working with vendors and franchisees so that the company has more differentiated and exclusive products for its marketplace.
Additionally, GNC Holdings’ refranchising strategy has boosted its profits substantially. By the end of the second quarter, it refranchised 90 of its company-owned stores and recorded refranchising gains of $16.9 million in the period. The company also holds a strong cash balance position.
On the flip side, the nutritional supplements industry is characterized by rapid and frequent changes in demand for products and new product introductions. Moreover, GNC Holdings’ international competitors include large international pharmacy chains, major international supermarket chains and other large U.S.-based companies with global operations.
Management fears that in the face of stiff competition, the company may fail to function effectively and its attempts to do so may require it to reduce prices, which in turn may hurt margins. Further, currency devaluation in Mexico adversely affected consumer demand within GNC Holdings’ international business.
Stocks to Consider
Some better-ranked stocks in the broader medical sector are GW Pharmaceuticals plc (GWPH - Analyst Report) , Lantheus Holdings, Inc. (LNTH - Snapshot Report) and Quidel Corp. (QDEL - Snapshot Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Biopharmaceutical major, GW Pharmaceuticals has gained 79.9% year to date, much better than the S&P 500’s 5.7% over the same period. Over the past two months, the company has seen two estimates move higher, compared to no downward movement for the current fiscal.
Lantheus Holdings, a worldwide provider of diagnostic medical imaging agents, has an impressive long-term earnings growth rate of 12.5%. Year to date, the stock has performed better than the S&P 500, with a gain of 143.2%.
Quidel Corp., a provider of diagnostic testing solutions for applications primarily in infectious diseases, women’s health, and gastrointestinal diseases, has an impressive long-term earnings growth rate of 20%, better than the industry’s 14.8%. The stock recorded a gain of 17.5% over the past one year.
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