Seeking Alpha • Aug 15

Buying Back Into United-Guardian, Inc.

Since I took my chips off the table a few months back, the shares have lost over 1/3 of their value. This has put the company back on my radar. The company is less profitable, to be sure, but the dividend is reasonably well-supported, and the yield is high. This gives investors time to wait for a turnaround. We're told to "buy when others are fearfully selling." This is easier said than done, and I think United-Guardian is an example of this phenomenon. If you've got a vague inkling that the only reason I write on this platform is to brag publicly, get ready for that inkling to be massively reinforced, because today will see some industrial-grade bragging on my part. I'll try (unsuccessfully) to ignore this annoying little voice in my head yammering something about "pride goeth the fall" or whatever, so I can focus on writing about the latest win. As I pointed out in my latest piece about United-Guardian, Inc. (UG). I had outperformed the S&P 500 slightly over the previous four years, but it was time to take chips off the table. I did that this past April, and since then the shares are down about 36%. So, to drive the point home, in 2018 I was bullish on this stock and rode it to a great return. This past April I sold shares, and they've lost over ⅓ of their value since. I want to revisit this name primarily to brag, obviously, but I think there are some other reasons to revisit the name. Specifically, the company has posted financial results since I last looked at the company, and those deserve commentary. Additionally, a stock trading at $15.50 is much less risky an investment than the same stock trading at $24.50, so it may be worth buying back in at this point. I'm self-aware enough to realise that my writing can be tiresome to many. I spell words properly, and that may bother some of my American audience, with their, uh, "singular" approach to the English language. Worse, I can be a tiresome braggart, as I've already demonstrated above. This may offer some clues about the current state of my social life. Anyway, whatever the reason, I fully understand that you may not want to douse yourself in undiluted "Doyle mojo." For that reason, I offer up a "thesis statement" paragraph in each of my articles. This gives you the highlights of my argument without needing to wade through the swamp that is a full-blown article. You're welcome. Here goes. I'll be buying back into this company this morning because the shares are now sufficiently cheap again. I'm doing this in spite of the recent drop in profitability. I think the dividend is reasonably well covered, and I think the high dividend yield will be supportive of price, suggesting very limited downside from here. That said, even if the shares drop in price from the current level, the dividend will compensate for any losses over time in my view. I like investments where time is your friend, and that is certainly the case here. There you have it. If you continue to read from this point, any resulting nausea that my writing produces is on you. Company Background & Risks In case you're unfamiliar with United-Guardian, I'll do my best to enlighten you. The company operates in four distinct product categories: cosmetic ingredients, pharmaceuticals, medical products, and specialty industrial products, and each of these is marketed slightly differently. In all four categories, the company is focused on R&D activities, as evidenced by the fact that it's been granted 30 patents since its founding in 1942. The R&D efforts in the cosmetic ingredients space have been directed toward formulating "natural" products that are used as components of various cosmetic products that are then included in the formulations produced by marketing partners. The company sells its cosmetic ingredients through 5 marketing partners, the largest of which is Ashland Specialty Ingredients. These partnerships are ideal because partners have much deeper market penetration and reach than the company could achieve. The "cosmetic ingredients" category is the company's largest (~49% of sales) and fastest growing, and it is the group of products that I'm most excited about. In particular, I have high hopes for the Lubrajel suite of products. I think the macro background is quite favourable, because the demand for "natural" products is expected to grow somewhere between a healthy 5.3% and an eye-watering 6.6% pace over the next 8 years. There are two risks that I've been able to identify here. The first of these is the currency. Although fully 80% of sales take place in the United States, the stronger U.S. dollar will inevitably impact sales going forward. The next risk involves the company's ability to obtain raw materials. They have consistently been able to acquire what they needed, even during the height of the pandemic, some materials are now more expensive, and there are now longer lead times for some of them. The rising dollar and increased costs may obviously impact the company's gross profit margin on certain products. Financial Snapshot Relative to the first six months of 2021, the financial performance during the most recent period has obviously been mixed. Revenue during the first six months of the year saw sales up by about 6% compared to 2021, but net income has collapsed, down by ~$981 thousand, or 39%. The reason for this relates to increased costs of sales, operating expenses, and R&D expenses, each up by 19%, 20.3%, and 11.74% respectively. Additionally, the company took an $854 thousand dollar loss on marketable securities. The capital structure also deteriorated fairly significantly relative to the same period in 2021, with total liabilities up by ~15%, and cash down by about 21.5%. While I like making comparisons from one period to the next, it's sometimes troubling because one or both periods may not be representative. For instance, you may remember that there was a global pandemic in 2020-2021 that turned off global economic activity, and thus any comparisons to that period may be fraught with bias. For that reason, I also want to draw a comparison between the most recent period and the first six months of 2019, as the latter period is free of the pernicious effects of the pandemic. When compared to 2019, similar themes emerge. Revenue was higher and net income was lower in 2022, and the capital structure in 2022 was also much weaker. Given the above, I think it's reasonable to suggest that a part of the stock price weakness relates to the drop-off in income. One thing that buoys the stock price, though, is the dividend, and so I want to write briefly about it. If the dividend is reasonably secure, and the valuation is low enough, I'd be very happy to buy back in. The company generated $1.164 million in cash from operations during the first six months of 2022, compared to $2.6 million during the same period in 2021. The reason for the drop obviously relates to a drop in net income, but there are two other factors worth noting. First, the company spent $317.4 thousand on new inventories and spent $231.4 thousand in prepaid taxes. I think these will either add to future cash inflows, or at least reduce future outflows. During the same period, the company spent $1,699.392 on dividends, or about $535,000 more than it generated in cash from operations. It's also relevant that the company has $355 thousand in cash and approximately $6.4 million in marketable securities. Finally, although I moaned about "deterioration" above, I think it's worth noting that "cash and marketable securities" is still over 3x greater than "total liabilities." Thus, I'm reasonably confident that the dividend can be maintained here, and for that reason, I'd be happy to buy back in at the right price. United-Guardian Financials (United-Guardian Investor Relations) The Stock If you read my stuff regularly you know what time it is. It's the time where I turn into a bit of a financial "hall monitor", where I remind everyone that a company is distinct from its stock. The company buys inputs and sells them (ideally) at a profit. In the final analysis, that's all any company is. The stock, on the other hand, is a piece of paper that gets traded around in a public market and is influenced by a great many factors, many of which are only peripherally related to the underlying business. For instance, the stock price is certainly impacted by the company's recent financial performance. It's also impacted by the crowd's ever-changing views about the company's future financial performance. It's also potentially impacted by the changing moods of an influential analyst. Finally, the stock is influenced by the crowd's ever-changing perspectives on the relative merits of "stocks" as an asset class. For these reasons, the stock is a much more volatile thing than the underlying business. While this is tiresome, it is potentially profitable. If we can spot the discrepancies between the crowd's take on a given business, and the assumptions embedded in the price, we can earn a profit. Although I'm very, very sorry to circle back on this point, I bought when the market for these shares became excessively pessimistic years ago, and sold when the market became excessively optimistic. That was a lie. I wasn't at all sorry about reminding you of my success with this one. I really, really hope you forgive me. Anyway, I've found that cheaper stocks offer a higher risk-adjusted return, so I like to buy shares when I consider them to be cheap and eschew them when they get expensive. If you're one of my regular reader-victims you know that I measure the cheapness (or not) of a stock in a few ways, ranging from the simple to the more complex. On the simple side, I look at the ratio of price to some measure of economic value like sales, earnings, free cash flow, and the like. Ideally, I want to see a stock trading at a discount to both its own history and the overall market. In my previous missive, I took profits here because the price to free cash reached 22.5 times. The shares are now about 25% cheaper on that basis per the following: UG data by YCharts While the shares are relatively cheaper, investors are (unsurprisingly) being compensated with a much higher dividend yield, per the following: UG data by YCharts

Gesamte Aktionärsrendite	n/a
Zukünftige Dividendenrendite	n/a
Wachstum der Dividende	-5.3%
Nächster Dividendenzahlungstermin	n/a
Ex-Dividendendatum	n/a
Dividende pro Aktie	n/a
Ausschüttungsquote	75%

Segment	Dividendenrendite
Unternehmen (UG)	7.0%
Untere 25 % des Marktes (US)	1.4%
Markt Top 25 % (US)	4.1%
Branchendurchschnitt (Personal Products)	3.0%
Analystenprognose (UG) (bis zu 3 Jahre)	n/a

Daten	Zuletzt aktualisiert (UTC-Zeit)
Unternehmensanalyse	2026/09/15 04:07
Aktienkurs zum Tagesende	2026/09/15 00:00
Gewinne	2026/06/30
Jährliche Einnahmen	2025/12/31

Paket	Daten	Zeitrahmen	Beispiel US-Quelle ^*
Finanzdaten des Unternehmens	10 Jahre	Gewinn- und Verlustrechnung Kapitalflussrechnung Bilanz	SEC-Formular 10-K SEC-Formular 10-Q
Konsensschätzungen der Analysten	+3 Jahre	Finanzielle Vorausschau Kursziele der Analysten	Analysten Research Berichte Blue Matrix
Marktpreise	30 Jahre	Aktienkurse Dividenden, Splits und Aktionen	ICE-Marktdaten SEC-Formular S-1
Eigentümerschaft	10 Jahre	Top-Aktionäre Insiderhandel	SEC-Formular 4 SEC-Formular 13D
Verwaltung	10 Jahre	Das Führungsteam Direktorium	SEC-Formular 10-K SEC-Formular DEF 14A
Wichtige Entwicklungen	10 Jahre	Ankündigungen des Unternehmens	SEC-Formular 8-K

United-Guardian Ausschüttungen und Rückkäufe

Zukünftiges Wachstum Kriterienprüfungen 4/6

Wichtige Informationen

Jüngste Updates zu Dividenden und Rückkäufen

Dividend increased to US$0.30

United-Guardian, Inc. Declares Cash Dividend, Payable on August 4, 2026

United-Guardian (NASDAQ:UG) Has Announced A Dividend Of $0.25

United-Guardian, Inc. Declares Cash Dividend, Payable on February 17, 2026

United-Guardian, Inc. Declares Cash Dividend, Payable on August 1, 2025

United-Guardian Declares Cash Dividend, Payable on February 18, 2025

Recent updates

Second quarter 2026 earnings released: EPS: US$0.16 (vs US$0.14 in 2Q 2025)

Dividend increased to US$0.30

United-Guardian, Inc. Declares Cash Dividend, Payable on August 4, 2026

United-Guardian, Inc., Annual General Meeting, May 13, 2026

What United-Guardian, Inc.'s (NASDAQ:UG) 25% Share Price Gain Is Not Telling You

United-Guardian (NASDAQ:UG) Has Announced A Dividend Of $0.25

United-Guardian, Inc. Declares Cash Dividend, Payable on February 17, 2026

United-Guardian (NASDAQ:UG) Will Be Looking To Turn Around Its Returns

Here's What's Concerning About United-Guardian's (NASDAQ:UG) Returns On Capital

United-Guardian, Inc. Declares Cash Dividend, Payable on August 1, 2025

United-Guardian (NASDAQ:UG) Has Some Difficulty Using Its Capital Effectively

United-Guardian, Inc., Annual General Meeting, May 15, 2025

United-Guardian Declares Cash Dividend, Payable on February 18, 2025

United-Guardian, Inc. (NASDAQ:UG) Not Doing Enough For Some Investors As Its Shares Slump 29%

These Return Metrics Don't Make United-Guardian (NASDAQ:UG) Look Too Strong

Earnings Not Telling The Story For United-Guardian, Inc. (NASDAQ:UG) After Shares Rise 26%

United-Guardian's (NASDAQ:UG) Upcoming Dividend Will Be Larger Than Last Year's

Subdued Growth No Barrier To United-Guardian, Inc.'s (NASDAQ:UG) Price

United-Guardian, Inc. Declares Cash Dividend, Payable on July 31, 2024

United-Guardian, Inc. Appoints Denise Costrini as Marketing Director

Investor sentiment improves as stock rises 17%

United-Guardian (NASDAQ:UG) Has Some Difficulty Using Its Capital Effectively

First quarter 2024 earnings released: EPS: US$0.20 (vs US$0.17 in 1Q 2023)

Now 21% overvalued

United-Guardian, Inc., Annual General Meeting, May 15, 2024

Full year 2023 earnings released: EPS: US$0.56 (vs US$0.56 in FY 2022)

United-Guardian: Solid Balance Sheet, Solid Dividend, Strong Potential Upside

Investor sentiment improves as stock rises 15%

Returns On Capital Signal Difficult Times Ahead For United-Guardian (NASDAQ:UG)

United-Guardian, Inc. Declares Cash Dividend, Payable on February 20, 2024

New minor risk - Share price stability

Now 20% overvalued after recent price rise

United-Guardian Appoints Catherine Joy Kolinski as Director

United-Guardian, Inc.'s (NASDAQ:UG) Share Price Is Matching Sentiment Around Its Earnings

New minor risk - Share price stability

Third quarter 2023 earnings released: EPS: US$0.14 (vs US$0.075 in 3Q 2022)

Calculating The Intrinsic Value Of United-Guardian, Inc. (NASDAQ:UG)

Investor sentiment improves as stock rises 24%

Second quarter 2023 earnings released: EPS: US$0.10 (vs US$0.14 in 2Q 2022)

Investor sentiment improves as stock rises 17%

Estimating The Intrinsic Value Of United-Guardian, Inc. (NASDAQ:UG)

United-Guardian, Inc. Declares Cash Dividend, Payable on August 2, 2023

Insufficient new directors

United-Guardian, Inc. Announces Resignation of Beatriz Blanco as Chief Executive Officer

First quarter 2023 earnings released: EPS: US$0.17 (vs US$0.20 in 1Q 2022)

Full year 2022 earnings released: EPS: US$0.56 (vs US$1.01 in FY 2021)

Now 25% undervalued after recent price drop

United-Guardian (NASDAQ:UG) Is Achieving High Returns On Its Capital

Now 22% undervalued after recent price drop

Now 22% undervalued after recent price drop

United-Guardian, Inc. Declares Year-End Dividend, Payable on December 7, 2022

High number of new directors

Why We Like The Returns At United-Guardian (NASDAQ:UG)

Now 22% undervalued after recent price drop

Third quarter 2022 earnings released: EPS: US$0.075 (vs US$0.22 in 3Q 2021)

United-Guardian, Inc. Announces Executive Changes

Investor sentiment improved over the past week

Calculating The Intrinsic Value Of United-Guardian, Inc. (NASDAQ:UG)

Now 20% undervalued after recent price drop

Investor sentiment deteriorated over the past week

Buying Back Into United-Guardian, Inc.

Second quarter 2022 earnings released: EPS: US$0.14 (vs US$0.29 in 2Q 2021)

United-Guardian, Inc., Annual General Meeting, Aug 26, 2022

United-Guardian, Inc. Announces Retirement of Ken Globus as CEO

Investor sentiment deteriorated over the past week

Investor sentiment improved over the past week

Now 21% undervalued after recent price drop

United-Guardian (NASDAQ:UG) Will Pay A Smaller Dividend Than Last Year

First quarter 2022 earnings released: EPS: US$0.20 (vs US$0.26 in 1Q 2021)