USANA has been treading water for the past six months, recording a small return of 4.9% while holding steady at $26.51. The stock also fell short of the S&P 500’s 22.7% gain during that period.
Is now the time to buy USANA, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free for active Edge members.
Why Is USANA Not Exciting?
We're cautious about USANA. Here are three reasons you should be careful with USNA and a stock we'd rather own.
1. Revenue Spiraling Downwards
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. USANA struggled to consistently generate demand over the last three years as its sales dropped at a 5.9% annual rate. This was below our standards and is a sign of lacking business quality.
2. Fewer Distribution Channels Limit its Ceiling
With $899.2 million in revenue over the past 12 months, USANA is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers.
3. EPS Trending Down
We track the change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Sadly for USANA, its EPS declined by 16.2% annually over the last three years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.
Final Judgment
USANA isn’t a terrible business, but it isn’t one of our picks. With its shares lagging the market recently, the stock trades at 9.7× forward P/E (or $26.51 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're pretty confident there are superior stocks to buy right now. We’d suggest looking at a safe-and-steady industrials business benefiting from an upgrade cycle.
Stocks We Would Buy Instead of USANA
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