This company, primarily a manufacturer of weight management nutritional products, by mainly direct selling channel, including meal replacement, protein shakes, snacks, and dietary and nutritional supplements, has been grouped into weight-loss sector in personal care industry.
It seems that the direct selling market for weight loss related products has been growing as indicated by the quick increase in sales. While the performances, in terms of sales volume, are different among different companies and regions, we have seen the solid demand for weight loss related products and solid sales base. The estimate of favourable market environment has also been confirmed by the generally increasing selling price in the past three years.
The generally improved operating margin of companies ( increased from about 10% to 13% in 2017) in this sector also help prove that the increase in sales volumes may be a result of natural increase in demand both from consumers for product and from sales for opportunities to earn money. The improved operating margin has come from improvement both in gross margin (from 77% to 78% of 2017) and in SG&A as percentage of sales (from 66% to 65% of 2017).
The typical average stock price/cash flow ratio is about 40 ranging from 34 to 46.
It seems that the revenue of products of this company has fluctuated in the past three years, as a result of imbalanced performance in demand in different region and impact by strong US dollars, and presented a generally weak demand as indicated by the decreasing sales volume in US market. Selling price has continuingly been rising during the same period.
The fiscal 2017compared with the same period of 2016
Net revenue decreased 1.4% (1.1% excluding currency) attributable primarily to decrease of about 3.6% in sales volume and decrease of 1.1% in products mix offset by increase of 3% in price.
The fiscal 2016 compared with 2015
Net revenue increased 0% (6.3% excluding currency) attributable primarily to increase of about 4.6% in sales volume and increase of 2.2% in price.
Fiscal 2015 compared with fiscal 2014
Net revenue decreased 9.9% (increased 4.7% excluding currency) attributable primarily to decrease of about 2% in sales volume offset by increase of 2% in products mix and increase of 5.2% in price.
Its gross margin has gone up by about 70 basis points to about 81% in 2017. Its SG&A as percentage of sales is around 68%. And its operating margin is about 13% in 2017.
Stock performance
This stock currently has a stock price/cash flow ratio of 34. We think that its stock is being relatively slightly overvalued.
