Why GNC Holdings, Inc. Stock Skyrocketed Nearly 50% Today

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What happened

Shares of GNC Holdings Inc. (NYSE: GNC) were up 47.8% as of 2:15 p.m. EST Thursday after the health and wellness products retailer announced strong preliminary fourth-quarter results.

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More specifically, GNC saw same-store sales grow 5.7% year over year, fulfilling management's promise last quarter that the metric would accelerate from more modest 1.3% growth in Q3. On the bottom line, that should translate to quarterly adjusted earnings per share in the range of $0.24 to $0.25, up from $0.07 per share in the same year-ago period and above consensus estimates for $0.23 per share.

So what

Recall that in December, GNC hired Goldman Sachs to help review strategic alternatives with the goal of optimizing its capital structure and more consistently generating shareholder value. This quarterly update was issued as part of that process.

"In the fourth quarter of 2017, our efforts to reposition the business continued to gain momentum," stated GNC CEO Ken Martindale. "As we head into 2018, we will continue to focus on our key initiatives including capital structure improvement, international business growth, exclusive and innovative products and services, a more engaging e-commerce and digital platform and further customer experience improvements."

If today's pop seems excessive, recall GNC stock fell nearly 23% in October alone, due to a combination of its disappointing third-quarter report and competitive concerns after Amazon (NASDAQ: AMZN) entered the nutritional supplements space with a new vitamin line. Combined with previous earnings disappointments earlier in the year and growing concerns over liquidity, GNC stock had plummeted almost 70% when all was said and done in 2017.

Now what

GNC further revealed that it ended 2017 with cash and equivalents of $64 million, and long-term debt of $1.3 billion after paying down its revolving credit facility in Q4. In addition, GNC reiterated its guidance for generating full-year (2017) free cash flow of $190 million to $210 million.

In the end, while GNC certainly has plenty of work to do in the coming quarters before investors' concerns are totally appeased, its relative strength in the fourth quarter is a big step to that end. And it's no surprise to see the market so aggressively bidding up GNC stock in response.

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