NGVC : NYSE :
Currently operating over 80 store locations, Natural
Grocers by Vitamin Cottage is a retailer focused
exclusively on natural and organic groceries (~65% of
sales), dietary supplements (~25% of sales), and
body/pet care products and health-minded books
(collectively ~10% of sales). Store locations span 14
states primarily across the Western US, with a geographic
concentration in Colorado and Texas.
All amounts in US$ unless otherwise noted.
Consumer & Retail — Health, Wellness and Lifestyle
A COMP RECOVERY SHOULD DRIVE VALUATION;
MAINTAIN BUY, $30 TARGET
We view Natural Grocers as well positioned in a favorable
industry with a growth equation that should drive attractive
revenue and EPS growth.
NGVC delivered EPS in line with consensus ($0.01 below us)
on $2M in revenue upside. Comps of 3.7% bested our 2.5%
estimate, and were very resilient despite heightened
Quarter to date Q1 comp approaching 5%, bolstering our
confidence in the turn in comp momentum. A plethora of
initiatives, along with easing compares and new competitive
pressure having peaked should yield continued comp gains.
F2015 EPS guidance in line with consensus and EPS growth
only impaired due to higher incentive comp YOY.
F2015 EPS reduced $0.01 to $0.65, while we introduce
F2016 EPS of $0.79, equating to 21% growth.
$30 target unchanged. The valuation of 28x forward earnings
looks full, but at 8.5x EBITDA we expect expansion. Our
target reflects 11.5x C2016 EBITDA.