What's In Store For GNC Holdings (GNC) This Earnings Season?

GNC Holdings, Inc. (NYSE:GNC) is expected to report fourth-quarter 2017 results on Feb 15, before the opening bell.

Last quarter, the company posted a negative earnings surprise of 3%. Also, GNC Holdings’ trailing four-quarter average earnings miss is 16.5%.

Let’s take a look at GNC Holdings’ announcement of preliminary fourth-quarter results.

Per the announcement, GNC Holdings saw an increase in fourth-quarter same store sales for domestic company-owned stores (including GNC.com sales) of 5.7%. Also, adjusted diluted earnings per share (EPS) are expected in the range of 24-25 cents compared with 7 cents in the prior-year quarter. In the year-ago quarter, the EPS decline was led by a substantial fall in revenues.

Meanwhile, the Zacks Consensus Estimate for earnings is pegged at 24 cents, reflecting a 25% decline from last quarter. Further, the Zacks Consensus Estimate for revenues is pegged at $558 million, reflecting a 8.4% drop from the preceding quarter.

Other Factors at Play

Dull Prospects in the U.S. & Canada Segment

GNC Holdings' third-quarter 2017 revenues dropped 2.9% year over year. The lower sales at the U.S. & Canada and manufacturing/wholesale segments can be cited as main reasons for the disappointing performance. In the absence of any catalyst, we expect a similar trend in the fourth quarter of 2017.

The Zacks Consensus Estimate for revenues at the segment stands at $452 million, reflecting a 4.4% decline from the year-ago quarter.

China e-commerce to Drive International Segment

Revenues at the international segment increased a whopping 19.3% in the last quarter. Revenues from international franchisees rose impressively. Solid performance in the China e-commerce platform is likely to be the key catalyst. As a result, the Zacks Consensus Estimate for revenues at the segment is pegged at $44.2 million, reflecting growth of 11.3% from the year-earlier quarter.

However, GNC Holdings has a number of competitors in the market that include large international pharmacy chains, supermarket firms and big U.S.-based companies with global operations. We expect the company to slash prices in the face of stiff competition, which in turn, might hurt margins.

Other Developments

On the bright side, the performance of One New GNC is improving gradually. PRO Access, the company’s premium loyalty offering, has enrolled nearly 585,000 members since its launch in March 2017. Apart from this, management is working on product pricing and innovation. Meanwhile, new consumer enrolment under the myGNC Rewards Program and launch of GNC storefront on Amazon (NASDAQ:AMZN) buoy optimism.

Earnings Whispers

Our proven model does not conclusively show an earnings beat for GNC Holdings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: The Earnings ESP for GNC Holdings is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: GNC Holdings carries a Zacks Rank #3, which increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of a positive earnings surprise.

Stocks to Consider

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.

Bio-Rad Laboratories (NYSE:BIO) has an Earnings ESP of +4.45% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Myriad Genetics (NASDAQ:MYGN) has an Earnings ESP of +0.42% and a Zacks Rank #3.

Henry Schein (NASDAQ:HSIC) has an Earnings ESP of +0.09% and a Zacks Rank #3.

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