Nature's Sunshine currently trades at $14.37 per share and has shown little upside over the past six months, posting a small loss of 2.7%. The stock also fell short of the S&P 500’s 16.9% gain during that period.
Is there a buying opportunity in Nature's Sunshine, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
We're cautious about Nature's Sunshine. Here are three reasons why you should be careful with NATR and a stock we'd rather own.
Why Is Nature's Sunshine Not Exciting?
Started on a kitchen table in Utah, Nature’s Sunshine (NASDAQ:NATR) manufactures and sells nutritional and personal care products.
1. Long-Term Revenue Growth Disappoints
A company’s long-term performance is an indicator of its overall quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for years. Unfortunately, Nature's Sunshine’s 1.3% annualized revenue growth over the last three years was weak. This was below our standards.
2. Less Negotiating Power with Suppliers
With $445.1 million in revenue over the past 12 months, Nature's Sunshine is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage.
3. EPS Trending Down
Analyzing the change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Sadly for Nature's Sunshine, its EPS declined by 5% annually over the last three years while its revenue grew by 1.3%. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
Nature's Sunshine isn’t a terrible business, but it doesn’t pass our quality test. With its shares underperforming the market lately, the stock trades at 19.6× forward price-to-earnings (or $14.37 per share). This valuation tells us a lot of optimism is priced in - you can find better investment opportunities elsewhere. Let us point you toward a fast-growing restaurant franchise with an A+ ranch dressing sauce.
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