Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on USANA Health Sciences, Inc. (NYSE:USNA) due to its excellent fundamentals in more than one area. USNA is a financially-healthy company with a great history of performance, trading at a great value. Below is a brief commentary on these key aspects. For those interested in digging a bit deeper into my commentary, take a look at the report on USANA Health Sciences here.
Undervalued with solid track record
USNA delivered a bottom-line expansion of 35% in the prior year, with its most recent earnings level surpassing its average level over the last five years. The strong earnings growth is reflected in impressive double-digit 28% return to shareholders, which is what investors like to see! USNA's strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. Looking at USNA's capital structure, the company has no debt on its balance sheet. It has only utilized funding from its equity capital to run the business, which is typically normal for a small-cap company. USNA has plenty of financial flexibility, without debt obligations to meet in the short term, as well as the headroom to raise debt should it need to in the future.
USNA's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of USNA's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of its peers with similar levels of earnings, USNA's share price is trading below the group's average. This further reaffirms that USNA is potentially undervalued.
For USANA Health Sciences, there are three fundamental aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for USNA’s future growth? Take a look at our free research report of analyst consensus for USNA’s outlook.
- Dividend Income vs Capital Gains: Does USNA return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from USNA as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of USNA? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.