The growth in the vitamins & supplements industry is expected to help companies like Vitamin Shoppe to maintain good growth in the top line. Improvement in the overall economy will also have its positive effects. So the turf is pretty good, and the performance in the last two quarters has been okay. The guidance has been a bit muted, and that has led to some disappointment. This is reflected in the performance of the stock which is now about 27% below the high of ~$65.9. However, the last one month has been good with a 8% rise. The upcoming earnings will determine the short term future of the stock. While the growth is likely to continue, the margins will be the key metric to watch. In the last earnings, the revenues had increased by 12.5% and the net income had increased by 14% on a yoy basis. Sequentially, the growth in revenues and net income was much higher. The key to success is launch of new products which can bolster growth and improve the margins. It is expected to launch a couple of new products later this year. There is no dearth of innovative products in the market. Chromadex Corporation (CDXC) recently launched Nicotinamide Riboside, a vitamin derivative expected to be used in a wide variety of indications, including obesity. Growth in the direct channel segment is likely to add to the pace of growth for Vitamin Shoppe, and the contribution is going to increase over time. In Q2'13, revenues are expected to increase by around 16%, and the EPS is likely to grow by 9.1%. This indicates that there may be some pressure on margins. If the company can beat these expectations, the stock may gain strength. The full year's average estimate for revenue is $1.10 billion ($951 million in 2012), and that for EPS is $2.29 ($2.03 in 2012).
