Schiff Nutrition International - Momentum
19 Setembro 2012 - 9:00PM
Zacks
Following its first quarter earnings release on September 18,
shares of
Schiff Nutrition International, Inc. (SHF) have
surged about 16.6% to hit an all-time high of $24.57. This Zacks #2
Rank (Buy) nutritional supplements provider appears to be a solid
momentum pick, given its average earnings surprise of about 16.8%
over the last five quarters, one-year return of more than 140.0%,
improving prospects and robust growth expectation for fiscal 2013.
Strong First Quarter
Schiff Nutrition began its fiscal 2013 on a strong note with
both revenues and earnings surpassing Zacks Consensus Estimates.
After taking into account transaction and other related costs,
earnings for the fiscal first quarter came in at 23 cents per
share, beating the Zacks Consensus Estimate by 27.8% and last
year’s earnings by 43.8%.
Net sales increased 46% year over year to $85.1 million, well
above the Zacks Consensus Estimate of $77 million. The upside
included contribution from the acquisition of Airborne Inc. in
March 2012 for $150 million in cash. Branded sales jumped 49.3% to
$74.8 million (representing 88% of total sales), while private
label sales rose 27.2% to $10.3 million.
Gross profit increased 53.9% year over year to $40.1 million,
which was accompanied by a 230 basis point (bps) expansion in gross
margin to 47.1%. The improvement was primarily due to a higher mix
of branded sales and strong operational execution, partially offset
by a purchase accounting adjustment ($1.6 million) related to the
acquired Airborne inventory. The company’s lean manufacturing and
sourcing initiatives drove operational efficiency in the
quarter.
Despite a 51.6% increase in operating expenses, operating margin
expanded 120 bps to 14.5%. Selling and marketing expense margin
increased 230 bps to 22.4%.
Earnings Estimates Heading Higher
Based on a better-than-expected first quarter, Schiff Nutrition
revised its outlook for fiscal 2013. The company now expects net
sales growth of 43% to 46%, compared to the previous guidance of
40% to 43%.
This outlook, along with better operational efficiency, led the
company to raise its gross margin guidance by 1 percentage point at
both ends to between 49% and 51%. The operating margin outlook now
stands at 14.5% to 16%, versus the previous 12.5% to 14%.
Earnings estimates have been on an increasing trend over the
last 60 days. The Zacks Consensus Estimate for fiscal 2013 advanced
almost 8.3% to 78 cents, representing year-over-year growth of
about 30.8%. Meanwhile, the Zacks Consensus Estimate for fiscal
2014 is up 6.7% to 95 cents, representing year-over-year growth of
approximately 21.3%.
Stretched Valuation
The valuation of Schiff Nutrition looks stretched compared to
its peers by most metrics. The company is trading at a
price-to-book (P/B) of 6.30x, a considerable premium to the peer
group average of 3.90x. Its EV/EBITDA ratios of 20.30 also
represent a hefty premium to the peer group average of 8.84. The
premium valuation seems warranted given the strong growth potential
of the company.
However, valuation looks reasonable on the basis of the
price-to-sales (P/S) ratio, which stands at 2.50, a 15.8% discount
to the peer group average of 2.97.
Chart Reflects Strength
Schiff Nutrition’s price performance has been reasonably strong
recently. The stock has been consistently trading above its 200-day
moving average since the end of March 2012. Barring occasional
pullbacks, the stock has been above its 50-day moving average over
the same period. Schiff Nutrition, with a market cap of $708.12
million, has also outperformed the S&P 500 Index over the past
year by a substantial margin. The one-year return for the stock is
roughly 140.6% compared to a 20.0% return from the S&P 500
index.
Incorporated in Delaware in 1996, Schiff Nutrition
International, Inc. is a leading nutritional supplement company
offering vitamins, nutrition supplements and nutrition bars in the
US as well as in the international market. Its portfolio boasts
several well-known brands including MegaRed, Move Free, Airborne,
Tiger's Milk, Sustenex, Digestive Advantage and Schiff Vitamins.
These are marketed primarily through the mass market (including
club) and, to a lesser extent, health food store and distribution
channels. The company also manufactures and distributes private
label products primarily for certain retail customers where its
branded products are sold. Schiff Nutrition’s largest customers are
Costco (COST) and Wal-Mart (WMT), including Sam's Club.
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