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Vitamin Shoppe Inc Stock Downgraded (VSI)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Vitamin Shoppe (NYSE: VSI) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and disappointing return on equity.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 0.9%. Since the same quarter one year prior, revenues rose by 10.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • VSI has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.01, which illustrates the ability to avoid short-term cash problems.
  • 35.56% is the gross profit margin for VITAMIN SHOPPE INC which we consider to be strong. Regardless of VSI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.66% trails the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Specialty Retail industry average. The net income has decreased by 1.4% when compared to the same quarter one year ago, dropping from $20.80 million to $20.51 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Specialty Retail industry and the overall market, VITAMIN SHOPPE INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

Vitamin Shoppe, Inc., through its subsidiaries, operates as a specialty retailer and direct marketer of nutritional products in the United States. It operates through two segments, Retail and Direct. Vitamin Shoppe has a market cap of $1.32 billion and is part of the services sector and specialty retail industry. Shares are down 15.2% year to date as of the close of trading on Wednesday.

You can view the full Vitamin Shoppe Ratings Report or get investment ideas from our investment research center.

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