USANA (NYSE:USNA) Q4 Sales Beat Estimates
Health and wellness products company USANA Health Sciences (NYSE:USNA) announced better-than-expected results in Q4 FY2023, with revenue down 3% year on year to $221.1 million. On the other hand, the company's full-year revenue guidance of $885 million at the midpoint came in 1.2% below analysts' estimates. It made a GAAP profit of $0.87 per share, improving from its profit of $0.66 per share in the same quarter last year.
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USANA (USNA) Q4 FY2023 Highlights:
Revenue: $221.1 million vs analyst estimates of $212.4 million (4.1% beat)
EPS: $0.87 vs analyst estimates of $0.52 (68.9% beat)
Management's revenue guidance for the upcoming financial year 2024 is $885 million at the midpoint, missing analyst estimates by 1.2% and implying -3.9% growth (vs -7.6% in FY2023)
Management's EPS guidance for the upcoming financial year 2024 is $2.70 per share at the midpoint, missing analyst estimates of $2.91 (7% miss)
Gross Margin (GAAP): 80.9%, up from 79.6% in the same quarter last year
Market Capitalization: $888.2 million
“USANA delivered solid fourth quarter operating results, which exceeded our expectations,” said Jim Brown, President and Chief Executive Officer.
Going to market with a direct selling model rather than through traditional retailers, USANA Health Sciences (NYSE:USNA) manufactures and sells nutritional, personal care, and skincare products.
Personal Care
Personal care products include lotions, fragrances, shampoos, cosmetics, and nutritional supplements, among others. While these products may seem more discretionary than food, consumers tend to maintain or even boost their spending on the category during tough times. This phenomenon is known as "the lipstick effect" by economists, which states that consumers still want some semblance of affordable luxuries like beauty and wellness when the economy is sputtering. As with other consumer staples categories, personal care brands must exude quality and be priced optimally given the crowded competitive landscape. Consumer tastes are constantly changing, and personal care companies are currently responding to the public’s increased desire for ethically produced goods by featuring natural ingredients in their products.
Sales Growth
USANA is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefitting from better brand awareness and economies of scale.
As you can see below, the company's revenue has declined over the last three years, dropping 6.7% annually. This is among the worst in the consumer staples industry, where demand is typically stable.
This quarter, USANA's revenue fell 3% year on year to $221.1 million but beat Wall Street's estimates by 4.1%. Looking ahead, Wall Street expects revenue to decline 2.7% over the next 12 months.
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Key Takeaways from USANA's Q4 Results
It was good that revenue, operating margin, and EPS all outperformed expectations this quarter. On the other hand, its full-year revenue and earnings forecast missed analysts' expectations. Overall, this quarter's results were fine but the outlook may cause Wall Street analysts to cut their estimates, which could weigh on the stock. The stock is flat after reporting and currently trades at $47.8 per share.
So should you invest in USANA right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
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