American's transition to healthier lifestyles has gained steam over the last few years and I believe in 2014 this desire for wellness will accelerate. GNC (NYSE:GNC), with its vitamins, supplements, and other similar offerings, will play a primary role in it all; this would propel earnings and revenues to all-time highs, providing a great investment opportunity. The company is about to report fourth-quarter earnings, so let's take a look at its recent performance and what analysts expect to see in the upcoming report to determine whether we should be buying right now.

The nutrition leader
GNC, or the General Nutrition Center, operates as a worldwide specialty retailer of health and wellness products. Its products include vitamins, nutritional products, and dietary supplements, as well as fitness equipment and accessories. The company also released a line of pet care products in the fall of 2010, which gave it exposure to another multibillion-dollar industry.

Source: GNC.

The last time out
Oct. 24 brought GNC's third-quarter report, and it was mixed compared to expectations:

Earnings per share $0.76 $0.76
Revenue $675.60 million $690.93 million

Earnings per share grew 24.6%, and revenue rose 8.7% year over year, driven by same-store sales increasing 8.2% in domestic company-owned locations. Gross profit increased 8% to $254 million, even though the company's gross margin declined 25 basis points to 37.59%. All three business segments showed strength, with retail revenue increasing 9.5%, franchise revenue growing 9.3%, and manufacturing and wholesale revenue rising 2.4%. Overall, it was a great quarter for GNC, but it missed revenue expectations, and caused the stock to fall 1% in the day's trading. 

The decline continued
GNC's stock has been on a steep decline since the start of 2014, underperforming the overall market. The decline was not due to a major downgrade of the stock or decreased outlook on the year, but is thought to be due to a report alleging that vitamins and supplements have no true benefits; the report was released on Dec. 17, so it was a very delayed reaction. I did not see this report as something that would cause a steep decline in the sale of vitamins, since studies like this usually take several rounds before being accepted by the public, but the market has reacted much differently; the stock has fallen more than 11% year-to-date and is more than 16% below its 52-week high.

Source: Yahoo! Finance.

Expectations and what to watch for
Fourth-quarter results are due out before the market opens on Feb. 13, and the current expectations call for growth on both the top and bottom lines. Here's an overview:

Earnings per share $0.65 $0.50
Revenue $633.4 million $565 million

These expectations call for earnings per share to increase 30% and revenue to increase 12.1% year over year. Other than the key metrics, I would like to see GNC show expansion of its gross margin and discussions of share repurchases due to the low stock price. In addition, whether in the earnings report or on the conference call, I would like GNC's management to comment on the allegations of vitamins having no true health benefits. A strong argument or even a dismissal of the study, paired with comments about the continued strength of the vitamin space, would likely allow investors and analysts to get bullish on the stock once again. If all of this occurs, there is no doubt in my mind that GNC will begin its rise toward its 52-week high.

Competitor's results due out shortly

Source: Herbalife.

Herbalife (NYSE:HLF), one of GNC's largest competitors, is also set to report quarterly results in just a few days. Herbalife is a global nutrition company that offers its products through independent distributors in more than 80 countries. Fourth-quarter results are due out after the market closes on Feb. 18, and the current expectations call for substantial growth:

Earnings per share $1.28 $1.05
Revenue $1.22 billion $1.06 billion

These expectations call for earnings per share to increase by 21.9% and revenue to increase by 15.2% year over year, which would result in the best fourth quarter in the company's history. However, even though it has been a strong year of earnings for Herbalife, it has been caught in the crossfire of Nu Skin's (NYSE:NUS) battle with Chinese authorities; Nu Skin is Herbalife's largest competitor in the independent distribution of nutritional products.

Source: NuSkin.

On Jan. 16, Chinese authorities announced that the multilevel marketer was under investigation for being an illegal pyramid scheme, making false promises to draw new clients in as distributors. This has caused the stock to fall more than 48% in 2014 and has brought Herbalife down as well, since it has an identical business model. China accounted for about 42% of Nu Skin's total sales in the first nine months of fiscal 2013 and 7% of Herbalife's, so these are very big chunks of the businesses in jeopardy. I would wait for this situation to be resolved before investing in Herbalife or Nu Skin, regardless of how great Herbalife's results are on Feb. 18.

The Foolish bottom line
GNC is a global powerhouse in the nutrition industry, and I believe it is only getting stronger as the world's population pursues healthier lifestyles. Its fourth-quarter earnings are going to be released shortly and I believe the current estimates are well within reach. Keep a close eye on this one and consider initiating a position right now, as I believe it is destined to move much higher.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.