NATR - Nature's Sunshine Products: Unconvincing Trajectory Despite Improvements
2024-01-31 02:00:52 ET
Summary
- Nature's Sunshine Products' development during the last decade has been disappointing, with an average revenue growth rate of +2%. The company has failed to innovate and attract new customers.
- Although there is clear expertise, global infrastructure and capabilities, and a strong brand, we feel execution has been poor.
- The industry is outgrowing this business, and we see little to change this.
- The company disappoints when compared to peers while benefiting from snowballing tailwinds. We feel exposure to this industry can be found elsewhere for better long-term gains.
- NATR is cheap, as many have suggested, but it appears to be a poor play for genuine long-term value. Weak companies can rarely move beyond this if things do not change.
Investment thesis
Our current investment thesis is:
- NATR is not an attractive business despite a depressed valuation. The company is seeing its performance improve but we attribute this almost wholly to industry tailwinds, rather than any improvement in execution.
- We expect the company to continue to lose ground in the coming years, with limited scope for improvement without fundamental change.