There may be some correction in the stock as it is looking a little tired at higher levels. These are all time highs and the moves have been pretty fast. So a little bit of rest may be good. But the corrections in GNC are usually bought as the fundamental performance has remained consistently good. However, the significant appreciation over the past year has left little room for slippages in earnings. Missing the estimates or other negative surprises may prompt profit booking. The revenue estimate for the next quarter is $674 million and the earnings per share is expected to be $0.74. For the full year 2013, the revenue and EPS is expected to be $2.66 billion and $2.80 respectively. For the momentum to continue, the company has to keep delivering on the growth front. Despite the rise, the valuations remain attractive and there are expectations of good growth in the future as well. The company continues to increase efforts to improve revenues. The latest new member discount program is expected to increase sales over the next few quarters. There may be some impact on the margins in the current quarter, but that is expected to be recovered over the subsequent quarters. For increasing sales the company needs focus on launching innovative products. Even smaller companies like ChromaDex Corporation (CDXC), backed by Dr Frost and Barry Honig, have come out with good ingredients recently. GNC also has to work on reducing the debt as that is the main area of concern in its balance sheet. Reduction in debt will also improve the margins. So in the short run, one may not see huge upside in the stock and the probability of a correction cannot be ruled out. But the past performance does indicate that things may remain on track in the long run.
