We assign a fundamental rating of 4 out of 10 to VSCO. VSCO was compared to 121 industry peers in the Specialty Retail industry. While VSCO is still in line with the averages on profitability rating, there are concerns on its financial health. VSCO has a decent growth rate and is not valued too expensively.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year VSCO was profitable.
VSCO had a positive operating cash flow in the past year.
VSCO had positive earnings in 4 of the past 5 years.
VSCO had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

VSCO has a Return On Assets of 3.31%. This is in the better half of the industry: VSCO outperforms 60.66% of its industry peers.
With an excellent Return On Equity value of 26.03%, VSCO belongs to the best of the industry, outperforming 84.43% of the companies in the same industry.
VSCO has a better Return On Invested Capital (6.85%) than 64.75% of its industry peers.
VSCO had an Average Return On Invested Capital over the past 3 years of 9.17%. This is below the industry average of 12.28%.

		Industry Rank	Sector Rank
ROA	3.31%
ROE	26.03%
ROIC	6.85%

ROA(3y)4.47%

ROA(5y)5.31%

ROE(3y)47.59%

ROE(5y)77.21%

ROIC(3y)9.17%

ROIC(5y)N/A

1.3 Margins

With a decent Profit Margin value of 2.66%, VSCO is doing good in the industry, outperforming 67.21% of the companies in the same industry.
In the last couple of years the Profit Margin of VSCO has declined.
VSCO's Operating Margin of 5.02% is fine compared to the rest of the industry. VSCO outperforms 66.39% of its industry peers.
In the last couple of years the Operating Margin of VSCO has declined.
The Gross Margin of VSCO (36.40%) is comparable to the rest of the industry.
In the last couple of years the Gross Margin of VSCO has grown nicely.

		Industry Rank	Sector Rank
OM	5.02%
PM (TTM)	2.66%
GM	36.4%

OM growth 3Y-28.61%

OM growth 5YN/A

PM growth 3Y-34.72%

PM growth 5YN/A

GM growth 3Y-3.67%

GM growth 5Y5.76%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), VSCO is destroying value.
VSCO has more shares outstanding than it did 1 year ago.
The number of shares outstanding for VSCO has been reduced compared to 5 years ago.
Compared to 1 year ago, VSCO has an improved debt to assets ratio.

2.2 Solvency

An Altman-Z score of 2.23 indicates that VSCO is not a great score, but indicates only limited risk for bankruptcy at the moment.
With a Altman-Z score value of 2.23, VSCO perfoms like the industry average, outperforming 49.18% of the companies in the same industry.
VSCO has a debt to FCF ratio of 4.37. This is a neutral value as VSCO would need 4.37 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 4.37, VSCO is doing good in the industry, outperforming 68.03% of the companies in the same industry.
A Debt/Equity ratio of 2.06 is on the high side and indicates that VSCO has dependencies on debt financing.
With a Debt to Equity ratio value of 2.06, VSCO is not doing good in the industry: 68.03% of the companies in the same industry are doing better.

		Industry Rank	Sector Rank
Debt/Equity	2.06
Debt/FCF	4.37
Altman-Z	2.23

ROIC/WACC0.7

WACC9.81%

2.3 Liquidity

A Current Ratio of 1.30 indicates that VSCO should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.30, VSCO is in line with its industry, outperforming 50.82% of the companies in the same industry.
VSCO has a Quick Ratio of 1.30. This is a bad value and indicates that VSCO is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.38, VSCO is doing worse than 61.48% of the companies in the same industry.

		Industry Rank	Sector Rank
Current Ratio	1.3
Quick Ratio	0.38

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has been growing slightly by 5.77% over the past year.
VSCO shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -25.48% yearly.
The Revenue has been growing slightly by 2.96% in the past year.
The Revenue has been decreasing by -3.67% on average over the past years.

EPS 1Y (TTM)5.77%

EPS 3Y-25.48%

EPS 5YN/A

EPS Q2Q%46%

Revenue 1Y (TTM)2.96%

Revenue growth 3Y-2.8%

Revenue growth 5Y-3.67%

Sales Q2Q%9.21%

3.2 Future

Based on estimates for the next years, VSCO will show a quite strong growth in Earnings Per Share. The EPS will grow by 11.81% on average per year.
VSCO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.09% yearly.

EPS Next Y5.11%

EPS Next 2Y10%

EPS Next 3Y11.81%

EPS Next 5YN/A

Revenue Next Year5.7%

Revenue Next 2Y4.77%

Revenue Next 3Y4.09%

Revenue Next 5YN/A

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 19.82, VSCO is valued on the expensive side.
Based on the Price/Earnings ratio, VSCO is valued a bit cheaper than the industry average as 73.77% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of VSCO to the average of the S&P500 Index (28.32), we can say VSCO is valued slightly cheaper.
VSCO is valuated rather expensively with a Price/Forward Earnings ratio of 17.19.
67.21% of the companies in the same industry are more expensive than VSCO, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 25.57, VSCO is valued a bit cheaper.

		Industry Rank	Sector Rank
PE	19.82
Fwd PE	17.19

4.2 Price Multiples

63.11% of the companies in the same industry are more expensive than VSCO, based on the Enterprise Value to EBITDA ratio.
VSCO's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. VSCO is cheaper than 76.23% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	14.14
EV/EBITDA	9.57

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The decent profitability rating of VSCO may justify a higher PE ratio.