After the massive rally of more than 46% in Thursday trade, GNC Holdings (NYSE:GNC) shares are down almost 9% in Friday trading. GNC stock currently trades just below $5 a share with a market capitalization of $239 million. Its stock rallied after the management presented a better-than-expected outlook for the fourth quarter of fiscal 2017. GNC Holdings is a health and wellness products retailer.
GNC stock experienced a sharp selloff in the last twelve months before the latest rally. Its stock price declined from $11 a share in mid-2017 to $3 a share at the end of 2017. The stock remained range bound in the last two weeks. Nevertheless, GNC stock gained momentum in Thursday trading, supported by the expectations for strong earnings and free cash flow performance.
The company now expects a same-store sales growth of 5% in the final quarter of FY2017, compared to the prior period. GNC management also expects its earnings per share to stand in the range of $0.25 per share, relative to the earnings per share of $0.07 in the past year quarter.
“In the fourth quarter of 2017, our efforts to reposition the business continued to gain momentum,” said Ken Martindale, chief executive officer.
Moreover, investors are cheering the strength of its balance sheet. In the final quarter, the company repaid the revolving credit facility and it has no borrowing outstanding at present. GNC Holding ended the final quarter with $64 million in cash & cash equivalents.
It expects free cash flows to be in the range of $210 million, which would be higher than the past year free cash flow of $208 million. In addition, its free cash flows are adequately covering the capital requirements of close to $65 million.
The company has also recently hired Goldman Sachs Group (NYSE:GS) as their strategic advisor. GNC is looking to enhance its capital structure and return on investments. GNC management has been working on several initiatives to expand their market share. On the other hand, its stock has the potential for steady growth, supported by a strong growth in earnings, improving liquidity, and increasing investment potential.
Featured Image: Facebook
