We assign a fundamental rating of 4 out of 10 to VSCO. VSCO was compared to 122 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 is not valued too expensively and it also shows a decent growth rate.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

VSCO had positive earnings in the past year.
VSCO had a positive operating cash flow in the past year.
VSCO had positive earnings in 4 of the past 5 years.
In the past 5 years VSCO always reported a positive cash flow from operatings.

1.2 Ratios

With a decent Return On Assets value of 3.31%, VSCO is doing good in the industry, outperforming 60.66% of the companies in the same industry.
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.
Looking at the Return On Invested Capital, with a value of 6.85%, VSCO is in the better half of the industry, outperforming 64.75% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for VSCO 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

VSCO's Profit Margin of 2.66% is fine compared to the rest of the industry. VSCO outperforms 67.21% of its industry peers.
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.
With a Gross Margin value of 36.40%, VSCO perfoms like the industry average, outperforming 49.18% of the companies in the same 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.
VSCO has less shares outstanding than it did 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 2.23 indicates that VSCO is not a great score, but indicates only limited risk for bankruptcy at the moment.
VSCO's Altman-Z score of 2.23 is in line compared to the rest of the industry. VSCO outperforms 49.18% of its industry peers.
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.
VSCO's Debt to FCF ratio of 4.37 is fine compared to the rest of the industry. VSCO outperforms 68.03% of its industry peers.
A Debt/Equity ratio of 2.06 is on the high side and indicates that VSCO has dependencies on debt financing.
The Debt to Equity ratio of VSCO (2.06) is worse than 68.03% of its industry peers.

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

ROIC/WACC0.7

WACC9.74%

2.3 Liquidity

A Current Ratio of 1.30 indicates that VSCO should not have too much problems paying its short term obligations.
With a Current ratio value of 1.30, VSCO perfoms like the industry average, 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.
VSCO's Quick ratio of 0.38 is on the low side compared to the rest of the industry. VSCO is outperformed by 61.48% of its industry peers.

		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%.
The earnings per share for VSCO have been decreasing by -25.48% on average. This is quite bad
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.
The Revenue is expected to grow by 4.09% on average over the next years.

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

A Price/Earnings ratio of 19.82 indicates a rather expensive valuation of VSCO.
73.77% of the companies in the same industry are more expensive than VSCO, based on the Price/Earnings ratio.
VSCO is valuated rather cheaply when we compare the Price/Earnings ratio to 28.30, which is the current average of the S&P500 Index.
VSCO is valuated rather expensively with a Price/Forward Earnings ratio of 17.19.
Compared to the rest of the industry, the Price/Forward Earnings ratio of VSCO indicates a somewhat cheap valuation: VSCO is cheaper than 67.21% of the companies listed in the same industry.
VSCO's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.57.

		Industry Rank	Sector Rank
PE	19.82
Fwd PE	17.19

4.2 Price Multiples

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

		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 VSCO does not grow enough to justify the current Price/Earnings ratio.
VSCO has a very decent profitability rating, which may justify a higher PE ratio.