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What's in Store for GNC Holdings (GNC) in Q3 Earnings?
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GNC Holdings, Inc. (GNC - Free Report) – a specialty retailer of health and nutrition related products – is scheduled to report its third-quarter 2016 financial results on Oct 27, before the opening bell.
Last quarter, the company posted a positive earnings surprise of 3.95%. However, GNC Holdings’ trailing four-quarter average earnings lagged the Zacks Consensus Estimate by 3.29%.
Let’s see how things are shaping up prior to this announcement.
Factors at Play
GNC Holdings’ performance in first-half 2016 was quite disappointing, with lower sales in its U.S. & Canada and international segments. Also, a 3.7% decline in same-store sales reflects softness in the company’s vitamins and food and drink categories as well as lower traffic, particularly in mall locations.
To address this issue, management has been taking proactive efforts by improving the inventory planning and production process. However, it is mostly unlikely for consequences of these efforts to stem the plunge in the near term. This is all the more assumed with the company’s temporary suspension of the 2016 guidance.
On a positive note, we are looking forward to an improvement in results in the company’s performance supplements and health and beauty categories. Additionally, the company has already started focusing extensively on other vitamin products by offering store associates training to prioritize vitamin solutions for its customers, capitalizing on the fact that over 70% of Americans are nutrition deficient through their diets. Moreover, as per management’s earlier directive, new promotions and store incentives must have started rolling out by now.
Also, during the last reported quarter, the company witnessed a sequential improvement in domestic retail product margin largely on fewer sales of expiring product and a subsequent improvement in sales mix. We expect the trend to continue in the to-be-reported quarter as well. Accordingly, we are upbeat about an improvement in GNC Holdings’ gross margin scenario in the quarter.
We expect these initiatives to bring about a moderate improvement in the vitamin business, which will be evident from GNC Holdings’ upcoming results.
Earnings Whispers
Our proven model does not conclusively show that GNC Holdings is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: GNC Holdings has an Earnings ESP of -5.63%. That is because the Most Accurate estimate is pegged at 67 cents while the Zacks Consensus Estimate is pegged higher at 71 cents.
Zacks Rank: GNC Holdings has a Zacks Rank #3, which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our proven model shows they have the right combination of elements to post an earnings beat this quarter:
The Cooper Companies Inc. (COO - Free Report) , with an Earnings ESP of +2.22% and a Zacks Rank #2.
Baxter International Inc. (BAX - Free Report) , with an Earnings ESP of +2.27% and a Zacks Rank #3.
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What's in Store for GNC Holdings (GNC) in Q3 Earnings?
GNC Holdings, Inc. (GNC - Free Report) – a specialty retailer of health and nutrition related products – is scheduled to report its third-quarter 2016 financial results on Oct 27, before the opening bell.
Last quarter, the company posted a positive earnings surprise of 3.95%. However, GNC Holdings’ trailing four-quarter average earnings lagged the Zacks Consensus Estimate by 3.29%.
Let’s see how things are shaping up prior to this announcement.
Factors at Play
GNC Holdings’ performance in first-half 2016 was quite disappointing, with lower sales in its U.S. & Canada and international segments. Also, a 3.7% decline in same-store sales reflects softness in the company’s vitamins and food and drink categories as well as lower traffic, particularly in mall locations.
To address this issue, management has been taking proactive efforts by improving the inventory planning and production process. However, it is mostly unlikely for consequences of these efforts to stem the plunge in the near term. This is all the more assumed with the company’s temporary suspension of the 2016 guidance.
GNC HOLDINGS Price and Consensus
GNC HOLDINGS Price and Consensus | GNC HOLDINGS Quote
On a positive note, we are looking forward to an improvement in results in the company’s performance supplements and health and beauty categories. Additionally, the company has already started focusing extensively on other vitamin products by offering store associates training to prioritize vitamin solutions for its customers, capitalizing on the fact that over 70% of Americans are nutrition deficient through their diets. Moreover, as per management’s earlier directive, new promotions and store incentives must have started rolling out by now.
Also, during the last reported quarter, the company witnessed a sequential improvement in domestic retail product margin largely on fewer sales of expiring product and a subsequent improvement in sales mix. We expect the trend to continue in the to-be-reported quarter as well. Accordingly, we are upbeat about an improvement in GNC Holdings’ gross margin scenario in the quarter.
We expect these initiatives to bring about a moderate improvement in the vitamin business, which will be evident from GNC Holdings’ upcoming results.
Earnings Whispers
Our proven model does not conclusively show that GNC Holdings is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: GNC Holdings has an Earnings ESP of -5.63%. That is because the Most Accurate estimate is pegged at 67 cents while the Zacks Consensus Estimate is pegged higher at 71 cents.
Zacks Rank: GNC Holdings has a Zacks Rank #3, which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our proven model shows they have the right combination of elements to post an earnings beat this quarter:
Edwards Lifesciences Corp. (EW - Free Report) , with an Earnings ESP of +2.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Cooper Companies Inc. (COO - Free Report) , with an Earnings ESP of +2.22% and a Zacks Rank #2.
Baxter International Inc. (BAX - Free Report) , with an Earnings ESP of +2.27% and a Zacks Rank #3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>