Investment Review №343. The return of the bulls
Vadim Merkulov
Head of Analytics department
Natural Grocers by Vitamin Cottage (NGVC)
NGVC shares look attractive for purchase with a target price of $36
About company
Natural Grocers by Vitamin Cottage, Inc. is a U.S. specialty grocery retailer focused on natural and organic foods, vitamins, and health & wellness products. Founded in 1955, the company operates a small-format store model centered on value pricing, nutrition education, and a curated assortment tailored to wellness-oriented consumers.
| Ticker | NGVC |
| Share price as of analysis | $27,82 |
| Target share price | $36 |
| Growth potential | 29,4% |
| Share price dynamics vs. indices | Day | Week | Month | Quarter | Year |
| NGVC | (1,6%) | 5,9% | 9,9% | 7,3% | (41,8%) |
| S&P 500 | (0,2%) | 3,2% | 9,3% | 4,6% | 34,6% |
| Russell 2000 | 0,6% | 4,6% | 14,5% | 5,6% | 48,5% |
| DJ Industrial Average | (0,0%) | 2,5% | 8,5% | 2,0% | 26,3% |
| NASDAQ Composite Index | (0,3%) | 5,3% | 12,7% | 6,3% | 49,8% |
Price dynamics NGVC, $
Key Investment Theses
Visible unit expansion supports organic growth. Management plans to open 6–8 new stores in FY2026 and targets 4–5% annual store count growth beyond FY2026, providing solid medium-term revenue visibility. The company’s smaller-format footprint also enables flexible expansion across both existing and new U.S. markets.
Loyal customer base and effective traffic monetization provide an additional growth lever. The {N}power loyalty program accounted for 83% of sales in 1Q26, while average ticket size for members was nearly 50% higher than for non-members. In our view, this creates further upside through higher repeat purchases, improved marketing efficiency, and stronger comparable-store sales trends.
Strong financial profile supports shareholder returns and self-funded growth. Since 2019, the company has returned $122 mn to shareholders through dividends while maintaining regular payouts. NGVC also has an active $10 mn share repurchase authorization, with $8.1 mn remaining available as of FY2025 year-end.
We set a target price for NGVC at $36 with a “Buy” recommendation. A stop-loss is advised at the $26 level.
| Ratio Analysis | 2023A | 2024A | 2025A | 2026E | 2027E | 2028E | 2029E | 2030E |
| ROE | 14% | 20% | 24% | 21% | 18% | 17% | 16% | 15% |
| ROA | 3% | 5% | 7% | 7% | 7% | 7% | 8% | 8% |
| ROCE | 6% | 10% | 12% | 11% | 11% | 12% | 13% | 12% |
| Sales/Assets (x) | 1,70x | 1,89x | 1,98x | 1,91x | 2,01x | 2,12x | 2,21x | 2,16x |
| Margins, % | 2023A | 2024A | 2025A | 2026E | 2027E | 2028E | 2029E | 2030E |
| Gross Margin | 28,7% | 29,4% | 29,9% | 29,6% | 29,6% | 29,7% | 29,7% | 29,7% |
| EBITDA Margin | 2,8% | 3,8% | 4,7% | 4,5% | 4,3% | 4,5% | 4,4% | 4,4% |
| Net Income Margin | 2,0% | 2,7% | 3,5% | 3,4% | 3,2% | 3,4% | 3,4% | 3,4% |
| Financials, $mln | 2023A | 2024A | 2025A | 2026E | 2027E | 2028E | 2029E | 2030E |
| Revenue | 1 141 | 1 242 | 1 331 | 1 385 | 1 455 | 1 533 | 1 616 | 1 704 |
| COGS | -814 | -877 | -933 | -975 | -1 024 | -1 077 | -1 137 | -1 198 |
| Gross Income | 327 | 365 | 398 | 411 | 431 | 456 | 479 | 506 |
| SG&A | -295 | -318 | -336 | -349 | -369 | -387 | -408 | -431 |
| Operating Income | 32 | 47 | 62 | 62 | 63 | 69 | 71 | 75 |
| Interest expense (income) | -3 | -4 | -3 | -3 | -3 | -3 | -3 | -2 |
| Pretax Income | 28 | 43 | 59 | 59 | 59 | 66 | 69 | 73 |
| Income Taxes | -5 | -9 | -12 | -12 | -12 | -14 | -14 | -15 |
| Net Income | 23 | 34 | 46 | 47 | 47 | 52 | 55 | 58 |
| Dilluted EPS | $ 1,02 | $ 1,47 | $ 2,00 | $ 2,04 | $ 2,03 | $ 2,25 | $ 2,35 | $ 2,48 |