There has been improvement in fundamentals of Vitacost over the past few quarters. However, it is still far away from turning net positive even on a quarterly basis. On a ttm basis, the current net loss is around $15.4 million. It may take several quarters of remarkable performance to turnaround on a full year basis. Years of losses have led to an accumulated deficit of around $50 million. The stock has done great and factored a lot of this improvement already. It is up by more than 65% over its 52 week low made in August and hence the investors have been rewarded. The future will depend on how the fundamentals improve over the next few quarters. If it can deliver a quarterly profit this year, then that can be a major trigger for the stock. Till that time, substantial improvement from current levels is a little difficult. So it will be good to be a little cautious now. In the last earnings, the revenue growth was good and the net loss reduced substantially on a yoy basis. Even on a sequential basis there was some reduction in net loss. Thankfully, it is a zero debt company and the main worry is the margins only. To improve margins it is surely working on cost rationalization. Maybe it can focus on the more profitable products. Third party products account for 75% of its sales. So it can try to get a little choosy. It can get better deals from smaller companies. Many smaller companies are developing innovative products which have the potential to generate sales volumes and also improve profitability. ChromaDex Corporation (CDXC), a company backed by billionaire investor Dr Frost, has recently launched a few innovative molecules which hold good potential. Vitacost can look at other products which are more in line with its own segment focus.
