Yahoo Finance When Should You Buy USANA Health Sciences, Inc. (NYSE:USNA)?
USANA Health Sciences, Inc. (NYSE:USNA), is not the largest company out there, but it saw a decent share price growth in the teens level on the NYSE over the last few months. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at USANA Health Sciences’s outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for USANA Health Sciences
What's the opportunity in USANA Health Sciences?
The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 16.17x is currently trading slightly below its industry peers’ ratio of 18.5x, which means if you buy USANA Health Sciences today, you’d be paying a decent price for it. And if you believe that USANA Health Sciences should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. In addition to this, it seems like USANA Health Sciences’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will USANA Health Sciences generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 3.9% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for USANA Health Sciences, at least in the short term.
What this means for you:
Are you a shareholder? USNA’s future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at USNA? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?
Are you a potential investor? If you’ve been keeping an eye on USNA, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. While conducting our analysis, we found that USANA Health Sciences has 1 warning sign and it would be unwise to ignore it.
If you are no longer interested in USANA Health Sciences, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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