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Started By
Message
GNC as a value stock investment
Posted on 10/2/16 at 3:26 pm
Posted on 10/2/16 at 3:26 pm
I'm new to this whole value stock picking thing and need some feedback on my choice and indicators.
I know that I should probably be picking an index fund and dumping my money away but quite frankly that's not what excites me about the stock market as that strategy doesn't need much discussion.
Market Cap is 1.4Billion
Enterprise value 2.9 billion
So that indicates a possible underpriced security
P/E 7.51
also indicates it's trading below.
I like the brand name recognition as well.
It doesn't seem like a very complicated business on the surface. They do whole sale, retail and online business selling workout and dietary supplements.
Dividend had an uptick this year as well which would all be a bonus for this stock to me as well sine I think it's price could increase greatly over the next years.
What else am I missing?
I know that I should probably be picking an index fund and dumping my money away but quite frankly that's not what excites me about the stock market as that strategy doesn't need much discussion.
Market Cap is 1.4Billion
Enterprise value 2.9 billion
So that indicates a possible underpriced security
P/E 7.51
also indicates it's trading below.
I like the brand name recognition as well.
It doesn't seem like a very complicated business on the surface. They do whole sale, retail and online business selling workout and dietary supplements.
Dividend had an uptick this year as well which would all be a bonus for this stock to me as well sine I think it's price could increase greatly over the next years.
What else am I missing?
6
Posted on 10/3/16 at 7:35 am to oklahogjr
gnc seems exactly like the type of company that amazon (or some other online nutrition stores) will kill off.
Posted on 10/3/16 at 7:23 pm to oklahogjr
Market space is too crowded. There are new supplement companies popping up every day. And like others said the brick and mortar locations will soon be gone
Posted on 10/3/16 at 8:06 pm to oklahogjr
How GNC is still in business is beyond me.
Posted on 10/4/16 at 8:49 am to oklahogjr
as an avid amateur bodybuilder i can assure you GNC's market share will dwindle over the next 5-10 years. google bodybuilding.com. It is essentially GNC with a greater selection of brand names and cheaper pricing. They also have more bulk buying options and offer great sales.
I used to live in GNC in high school.now, I haven't stepped foot in one in probably 3 or 4 years. This is a common theme among the serious workout community
I used to live in GNC in high school.now, I haven't stepped foot in one in probably 3 or 4 years. This is a common theme among the serious workout community
Posted on 10/6/16 at 12:26 am to oklahogjr
P/E can be a good screen for value stocks, but isn't as complete as an EV-based metric such as EV/EBITDA. That's because a highly levered company could be cheap on a price basis but expensive on an enterprise value basis. Of course, if the company has only recently levered up and the benefits of said leverage are expected to be substantial, a stock priced cheaply on a P/E basis could see substantial returns on equity. The flip side, of course, is that the heavy debt could magnify losses as well.
If you're going to use P/E, at least cross-check against an EV-based metric and keep credit quality in mind before making any investment.
Consider:
Company A has $10 in equity and $90 in debt with $2 in net income and $4 in EBITDA
This company trades at a P/E of only 5 (20% earnings yield), but an EV/EBITDA of 25 (4% EBITDA yield). Is it cheap or expensive?
The answer is that it appears cheap on a P/E basis, but this could be due to the fact the company has significant debt such that the market has concerns about its viability. Were you acquiring the entire firm (equity and assumption of debt), you may assume it was expensive on the basis of EV/EBITDA.
If you're going to use P/E, at least cross-check against an EV-based metric and keep credit quality in mind before making any investment.
Consider:
Company A has $10 in equity and $90 in debt with $2 in net income and $4 in EBITDA
This company trades at a P/E of only 5 (20% earnings yield), but an EV/EBITDA of 25 (4% EBITDA yield). Is it cheap or expensive?
The answer is that it appears cheap on a P/E basis, but this could be due to the fact the company has significant debt such that the market has concerns about its viability. Were you acquiring the entire firm (equity and assumption of debt), you may assume it was expensive on the basis of EV/EBITDA.
Posted on 10/10/16 at 9:07 am to oklahogjr
Aside from anything to do with the financials of GNC, I just don't see the company around in 4-10 years. Maybe as a MLM. As others have said the rent space is too high and the products can be found anywhere. GNC may find some niche to evolve into something but I don't see it. Maybe medical/recreational marijuana? For me there is nothing attractive about this company at any price.
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