The stock has managed to remain stable for the last few weeks. The earnings had led to a fall, but $43 level held and it seems that the stock may remain around the current levels till the next major news flow. In fact, the last two earnings have led to large declines and taken the sheen out of the decent performance of the stock over the years. It has now fallen by 33% from its 52 week high made in February. The market for vitamins is expected to grow over time, and that growth may help Vitamin Shoppe in the long term. As per the recent survey, the number of Americans who take vitamin / supplement increased from 63% in 2012 to 64% in 2013. But for the stock to perform in the medium term, the company has to deliver positive surprises. This is especially true as the sentiments have been hit by the recent earnings. Viewed in isolation, the earnings were not bad with ~12.5% growth in revenues and ~14% increase in net income. More growth can be achieved through inorganic and organic expansion, and the margins can be increased by remaining open to new high margin products. Chromadex (CDXC) recently launched Nicotinamide Riboside commercially, and that molecule is expected to have a lot of potential. Similarly, other companies are also bringing out new interesting molecules from time to time. The smaller companies can sometime offer better margins, and if the products have potential, it becomes a good deal for both. The guidance was more responsible for the dampening of the sentiments. Lack of dividends is also another factor. However, the drop in price of the stock has made the valuations even more attractive. Now it is trading at 16.5 times forward earnings and price to sales is 1.35. The debt free balance sheet is also one more reason to be positive for the stock.
