We assign a fundamental rating of 4 out of 10 to VSCO. VSCO was compared to 122 industry peers in the Specialty Retail industry. There are concerns on the financial health of VSCO while its profitability can be described as average. 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.
In the past year VSCO had a positive cash flow from operations.
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 better Return On Assets (3.31%) than 60.66% of its industry peers.
The Return On Equity of VSCO (26.03%) is better than 84.43% of its industry peers.
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 12.24%.

		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.
VSCO's Profit Margin has declined in the last couple of years.
VSCO's Operating Margin of 5.02% is fine compared to the rest of the industry. VSCO outperforms 66.39% of its industry peers.
VSCO's Operating Margin has declined in the last couple of years.
VSCO's Gross Margin of 36.40% is in line compared to the rest of the industry. VSCO outperforms 49.18% of its industry peers.
VSCO's Gross Margin has improved in the last couple of years.

		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

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so VSCO is destroying value.
The number of shares outstanding for VSCO has been increased compared to 1 year ago.
The number of shares outstanding for VSCO has been reduced compared to 5 years ago.
The debt/assets ratio for VSCO has been reduced compared to a year ago.

2.2 Solvency

An Altman-Z score of 2.25 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 2.25, VSCO perfoms like the industry average, outperforming 50.82% of the companies in the same industry.
The Debt to FCF ratio of VSCO is 4.37, which is a neutral value as it means it would take VSCO, 4.37 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 4.37, VSCO is in the better half of 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.
VSCO's Debt to Equity ratio of 2.06 is on the low side compared to the rest of the industry. VSCO is outperformed by 68.03% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	2.06
Debt/FCF	4.37
Altman-Z	2.25

ROIC/WACC0.7

WACC9.74%

2.3 Liquidity

VSCO has a Current Ratio of 1.30. This is a normal value and indicates that VSCO is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of VSCO (1.30) is comparable to the rest of the industry.
A Quick Ratio of 0.38 indicates that VSCO may have some problems paying its short term obligations.
With a Quick ratio value of 0.38, VSCO is not doing good in the industry: 61.48% of the companies in the same industry are doing better.

		Industry Rank	Sector Rank
Current Ratio	1.3
Quick Ratio	0.38

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

VSCO shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 5.77%.
Measured over the past years, VSCO shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -25.48% on average per year.
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

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

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

Based on the Price/Earnings ratio of 19.82, the valuation of VSCO can be described as rather expensive.
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.
VSCO's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.30.
Based on the Price/Forward Earnings ratio of 17.19, the valuation of VSCO can be described as rather expensive.
Based on the Price/Forward Earnings ratio, VSCO is valued a bit cheaper than the industry average as 68.03% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 25.57. VSCO is valued slightly cheaper when compared to this.

		Industry Rank	Sector Rank
PE	19.82
Fwd PE	17.19

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, VSCO is valued a bit cheaper than 62.30% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, VSCO is valued a bit cheaper than 75.41% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	14.14
EV/EBITDA	9.77

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.