Will GNC Holdings (GNC) Disappoint This Earnings Season?

GNC Holdings, Inc. (NYSE:GNC) , a specialty retailer of health and nutrition related products, is scheduled to report third-quarter 2017 results on Oct 26, before the opening bell.

Last quarter, the company posted a positive earnings surprise of 2.5%. However, GNC Holdings’ trailing four-quarter earnings average miss stands at 19.9%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

GNC Holdings' last reported second-quarter 2017 revenues dropped 4.8% year over year. Apart from lower sales at the U.S. & Canada international and manufacturing/wholesale segments, the decline in revenues can be attributed to an overall drop in sales of protein, vitamins, weight management and food and drink categories. In absence of any catalyst to drive growth, we expect a similar trend in the third quarter of 2017 as well.

Moreover, 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. Thus, we expect the company to slash product prices in the face of stiff competition, which in turn, might hurt margins.

GNC Holdings, Inc. Price and EPS Surprise

GNC Holdings, Inc. Price and EPS Surprise | GNC Holdings, Inc. Quote

Also, currency headwinds continue to be a growing concern for GNC Holdings. Management also expects the failure to comply with FTC regulations and changing consumer preferences to hamper business.

However, on the bright side, the performance of One New GNC is improving gradually. Also, in the last reported quarter, PRO Access members doubled their visits, purchased double the products and spent significantly more in the second quarter. Banking on these factors, we expect the company to continue to gain in the yet-to-be-reported quarter as well. 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 -14.50%. 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.

The Cooper Companies, Inc. (NYSE:COO) has an Earnings ESP of +0.43% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Henry Schein, Inc. (NASDAQ:HSIC) has an Earnings ESP of +0.62% and a Zacks Rank #3.

Thermo Fisher Scientific Inc. (NYSE:TMO) has an Earnings ESP of +0.33% and a Zacks Rank #2.

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