GNC (GNC +4%) is trading higher in a sea of red today after interim Chief Executive Officer Bob Moran disclosed the purchase of 300,000 shares from Friday. He now owns 953,271 shares. This comes after Chief Financial Officer Tricia Toliver bought 4150,000 shares last Thursday.
The stock surged off all-time lows last month after the company reported better than expected first quarter results. While the quarter was better than analysts had modeled, the numbers still leave much to be desired.
Adjusted EPS fell 46% to $0.37/share while comps fell 3.9%. Same store sales declined for the fifth straight quarter but improved from a 12% decline in the fourth quarter. Transaction growth of 9% was offset by a 12% decline in ticket, or transaction size. GNC expects positive comps by the back half of the year, driven by improving online sales (and easy comparisons).
The stock surged 25% after the report, helped by the fact that some 40% of the stock's float -- the shares available to trade, were sold short.
The stock sold off last week after peer nutrition retailer Vitamin Shoppe (VSI) missed quarterly estimates and lowered guidance.
GNC's market cap is just below $500 million but the company has $1.5 billion in long term debt. The ~5x price-to-earnings (P/E) ratio seems attractive but the enterprise value (which includes the debt load) is over 7x EBITDA estimates for the year.
Vitamin Shoppe has a cleaner balance sheet and trades at ~4x EV/EBITDA with a 8x P/E ratio.
Taking a look at the charts, both companies are clearly struggling with reduced traffic amid increased competition from ecommerce.