GNC Holdings Inc (NYSE:GNC), a specialty retail company based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $4.5 at one point, and dropping to the lows of $3.05. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether GNC Holdings’s current trading price of $3.19 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at GNC Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for GNC Holdings
What’s the opportunity in GNC Holdings?
Good news, investors! GNC Holdings is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $13.35, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Another thing to keep in mind is that GNC Holdings’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
Can we expect growth from GNC Holdings?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted revenue growth of 4.74% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for GNC Holdings, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since GNC is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on GNC for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy GNC. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.