Schiff Nutrition Int'l - Aggressive Growth
October 23 2012 - 8:00PM
Zacks
Schiff Nutrition International Inc. (SHF) delivered a 27.8%
earnings surprise in its fiscal first quarter, and also raised its
guidance for the year. Shares of this nutrition supplement company
reached a 52-week high immediately following the earnings
announcement. Earnings momentum has been trending higher, which
made SHF a Zacks #1 Rank (Strong Buy) stock on September 29, 2012.
Solid First Quarter
On September 18, Schiff Nutrition reported adjusted earnings per
share of 23 cents for its fiscal first quarter, beating the Zacks
Consensus Estimate by 27.8%. Net income increased 28.2% year over
year to $6.0 million. The company has now reported positive
earnings surprises in 3 out of the past 4 quarters.
Net sales climbed 46.2% to $85.1 million, surpassing the Zacks
Consensus Estimate by 10.8%. Sales of branded offerings rose 49.3%
to $74.8 million, reflecting a positive impact from the March 2012
takeover of Airborne (a prominent brand in the immunological
support segment of the dietary supplements business).
Gross margin rose to 47.1% from 44.7% in the year-ago quarter
despite being adversely impacted by 180 basis points due to
purchase adjustment for inventory carried over from Airborne.
Adjusted EBITDA was $17.4 million, up 81.3% from a year ago.
Guidance Raised
The company raised its revenue growth guidance for fiscal 2013
to between 43% and 46% from the earlier projection of 40% to 43%.
The range for gross margin was lifted to between 49% and 51% from
the earlier outlook of 48% to 50%. The forecast for operating
margin has been hiked to between 14.5% and 16%, instead of 12.5% to
14%.
Earnings Momentum on the Rise
The Zacks Consensus Estimate for fiscal 2013 is up 10.3% in the
last two months to 86 cents per share, reflecting an estimated
year-over-year growth of 44.0%. For 2014, the Zacks Consensus
Estimate has moved up 19.1% to $1.12, reflecting implied growth of
29.4%.
Stretched Valuation
Schiff Nutrition trades at a premium to its peers by most
metrics. The stock is currently trading at a forward P/E multiple
of 26.9, a 180.6% premium to the peer group average of 9.6. The
price-to-book ratio of 5.7 is a good 51.7% higher than the peer
group average of 3.7. The stock fares better under the
price-to-sales metric, where its score of 2.38 is at a discount of
11.5% to the peer group average of 2.69.
A Look at the Chart
After drifting for several months, the stock has rallied lately.
It is currently trading above both its 50-day and 200-day moving
averages. Schiff Nutrition has rallied as much as 119.7% since the
start of the calendar year, compared with a 14% return from the
benchmark S&P 500.
Based in Salt Lake City, Utah, Schiff Nutrition is a sports
nourishment and nutrition supplement company with offerings that
include nutritional bars and vitamins. The company concentrates in
four key areas, namely digestion health, immunological support,
care of joints and health of the heart. Its wide range of brands
includes Tiger’s Milk and Schiff Vitamins. It has a market cap of
about $680 million.
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