Why Vitamin Shoppe Shares Popped

Why Vitamin Shoppe Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Vitamin Shoppe were looking healthier today, finishing up 12% after a strong third-quarter earnings report.

So what: The health-supplement chain's profit was essentially even with a year ago, coming in at $0.53 per share, a penny ahead of estimates. Larger expenses took a bite out of a solid 14% increase in sales, which at $272.5 million was also in line with expectations. Comparable sales grew by 2.6%, the 32nd consecutive quarter of positive growth, CEO Tony Truesdale noted. The retailer als said it expects low- to mid-single-digit sales growth for this year and mid-single-digit growth next year.

Now what: While Vitamin Shoppe's quarter was solid, the 12% jump in share price is a little surprising for just a penny beat. The chain seems to have a promising expansion plan in place, as it expects to open 60 stores next year, increasing the base nearly 10%, and is busy with its recent acquisition of Super Supplements and the opening of its largest-ever distribution center. Profits should grow steadily, but I'd be wary of shares that could get overheated again as they had when they peaked earlier this year near $65. There's little to justify a valuation much higher than the current one.

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Originally published