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.
Trade-Ideas LLC identified
) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified GNC Holdings as such a stock due to the following factors:
- GNC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $67.1 million.
- GNC has traded 686,130 shares today.
- GNC traded in a range 218.5% of the normal price range with a price range of $2.76.
- GNC traded above its daily resistance level (quality: 176 days, meaning that the stock is crossing a resistance level set by the last 176 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.
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More details on GNC:
GNC Holdings, Inc. operates as a specialty retailer of health and wellness products. It operates through three segments: Retail, Franchise, and Manufacturing/Wholesale. The stock currently has a dividend yield of 1.6%. GNC has a PE ratio of 14.2. Currently there are 5 analysts that rate GNC Holdings a buy, 1 analyst rates it a sell, and 7 rate it a hold.
The average volume for GNC Holdings has been 2.0 million shares per day over the past 30 days. GNC has a market cap of $3.5 billion and is part of the services sector and retail industry. The stock has a beta of 1.35 and a short float of 3.6% with 2.03 days to cover. Shares are down 33% year-to-date as of the close of trading on Wednesday.
rates GNC Holdings as a
. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- GNC HOLDINGS INC has improved earnings per share by 5.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GNC HOLDINGS INC increased its bottom line by earning $2.72 versus $2.29 in the prior year. This year, the market expects an improvement in earnings ($2.85 versus $2.72).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Specialty Retail industry and the overall market, GNC HOLDINGS INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- 40.37% is the gross profit margin for GNC HOLDINGS INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 10.35% is above that of the industry average.
- GNC, with its decline in revenue, slightly underperformed the industry average of 1.0%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Currently the debt-to-equity ratio of 1.81 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, GNC's quick ratio is somewhat strong at 1.00, demonstrating the ability to handle short-term liquidity needs.
- You can view the full GNC Holdings Ratings Report.