Is GNC Holdings, Inc. (NYSE:GNC) Undervalued?

GNC Holdings, Inc. (NYSE:GNC) has an ERP5 rank of 4718. The ERP5 Rank is an investment resource that analysts use to uncloak undervalued companies.  The ERP5 looks at the Price to Book ratio, Earnings Yield, ROIC and 5 year average ROIC.  The lower the ERP5 rank, the more undervalued a firm is thought to be.

As we move closer to the end of the year, investors might be closely monitoring key economic reports. Staying on top of the most recent reports can assist the individual see the overall landscape a bit clearer. It may be overwhelming to keep up with every single report that comes out, but which information has a bigger impact on stock investments may assist the investor. Investors may already be trying to gauge how they will set themselves up for success over the next couple of quarters. They may be still going over all the latest firm earnings reports trying to identify some names that can give the portfolio a jolt as we move into the New Year.

The Q.i. Value of GNC Holdings, Inc. (NYSE:GNC) is 11.00000. The Q.i. Value is another useful resource in determining if a firm is undervalued or not. The Q.i. Value is determined using the following ratios: EBITDA Yield, Earnings Yield, FCF Yield, and Liquidity. The lower the Q.i. value, the more undervalued the firm is thought to be.

Technicals
The EBITDA Yield is a great way to determine a firm’s profitability. This number is determined by dividing a firm’s earnings before interest, taxes, depreciation and amortization by the firm’s enterprise value. Enterprise Value is determined by taking the market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents. The EBITDA Yield for GNC Holdings, Inc. (NYSE:GNC) is 0.148284.

The Earnings to Price yield of GNC Holdings, Inc. (NYSE:GNC) is -0.806907.  This is determined by taking the EPS and dividing it by the last closing stock price.  This is one of the most trendy procedures investors use to grade a firm’s financial performance.  Earnings Yield is determined by taking the operating income or earnings before interest and taxes (EBIT) and dividing it by the Enterprise Value of the firm.  The Earnings Yield for GNC Holdings, Inc. (NYSE:GNC) is 0.115391.  Earnings Yield helps investors add up the return on investment for a given firm.  Similarly, the Earnings Yield Five Year Average is the five year average operating income or EBIT divided by the current enterprise value.  The Earnings Yield Five Year average for GNC Holdings, Inc. is 0.243210.

The FCF Yield 5yr Average is determined by taking the five year average free cash flow of a firm, and dividing it by the current enterprise value. Enterprise Value is determined by taking the market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents. The average FCF of a firm is determined by gazing at the cash generated by operations of the firm. The Free Cash Flow Yield 5 Year Average of GNC Holdings, Inc. (NYSE:GNC) is 0.143058.

Ratios

The Current Ratio of GNC Holdings, Inc. (NYSE:GNC) is 1.51. The Current Ratio is used by investors to determine whether a firm can pay short term and long term debts. The current ratio looks at all the liquid and non-liquid assets compared to the firm’s total current liabilities. A high current ratio reveals that the firm might have trouble managing their working capital. A low current ratio (when the current liabilities are higher than the current assets) reveals that the firm may have trouble paying their short term obligations.

The Leverage Ratio of GNC Holdings, Inc. (NYSE:GNC) is 0.722101.  Leverage ratio is the total debt of a firm divided by total assets of the current and past year divided by two.  Companies take on debt to finance their day to day operations.  The leverage ratio can add up how much of a firm’s capital comes from debt.  With this ratio, investors can better estimate how well a firm will be able to pay their long and short term financial obligations.

The price to book ratio or market to book ratio for GNC Holdings, Inc. (NYSE:GNC) currently stands at -1.454736.  The ratio is determined by dividing the stock price per share by the book value per share.  This ratio is used to determine how the market values the equity.  A ratio of under 1 typically reveals that the shares are undervalued.  A ratio over 1 reveals that the market is willing to pay more for the shares.  There are often many underlying factors that come into play with the Price to Book ratio so all additional metrics should be considered as well. 

Adding it All Up

The Piotroski F-Score is a scoring system between 1-9 that determines a firm’s financial strength.  The score helps determine if a firm’s stock is valuable or not.  The Piotroski F-Score of GNC Holdings, Inc. (NYSE:GNC) is 4.  A score of nine reveals a high value stock, while a score of one reveals a low value stock.  The score is determined by the return on assets (ROA), Cash flow return on assets (CFROA), change in return of assets, and quality of earnings.  It is also determined by a change in gearing or leverage, liquidity, and change in shares in issue.  The score is also determined by change in gross margin and change in asset turnover.

The Gross Margin Score is determined by gazing at the Gross Margin and the overall stability of the firm over the course of 8 years. The score is a number between one and one hundred (1 being best and 100 being the worst). The Gross Margin Score of GNC Holdings, Inc. (NYSE:GNC) is 8.00000. The more stable the firm, the lower the score. If a firm is less stable over the course of time, they will have a higher score.

Successful investors have typically created a diversified portfolio that has included proper uncertainty analysis and is designed to withstand various market environments. Once the portfolio is set up, investors can work on managing the portfolio for the long-term. Every investor may have a different set of personal goals and expectations for what they intend to get from the market in terms of returns. Expecting too much from the market can often times leave the investor disappointed. Although many people will try to predict returns with pinpoint accuracy, nobody can say for sure what the market will provide. Keeping expectations realistic can assist the individual investor better set themselves up for achieving those goals in the future.

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