Investors are always looking for growth in small-cap stocks like Nature’s Sunshine Products Inc (NASDAQ:NATR), with a market cap of US$176.31m. However, an important fact which most ignore is: how financially healthy is the business? Given that NATR is not presently profitable, it’s essential to understand the current state of its operations and pathway to profitability. I believe these basic checks tell most of the story you need to know. Nevertheless, since I only look at basic financial figures, I’d encourage you to dig deeper yourself into NATR here.
How much cash does NATR generate through its operations?
NATR’s debt levels surged from US$9.92m to US$13.69m over the last 12 months , which is made up of current and long term debt. With this increase in debt, the current cash and short-term investment levels stands at US$42.91m , ready to deploy into the business. Moreover, NATR has generated cash from operations of US$10.52m in the last twelve months, resulting in an operating cash to total debt ratio of 76.89%, indicating that NATR’s debt is appropriately covered by operating cash. This ratio can also be interpreted as a measure of efficiency for unprofitable businesses as traditional metrics such as return on asset (ROA) requires a positive net income. In NATR’s case, it is able to generate 0.77x cash from its debt capital.
Can NATR pay its short-term liabilities?
With current liabilities at US$53.66m, it appears that the company has been able to meet these commitments with a current assets level of US$102.51m, leading to a 1.91x current account ratio. For Personal Products companies, this ratio is within a sensible range as there’s enough of a cash buffer without holding too capital in low return investments.
Is NATR’s debt level acceptable?NATR’s level of debt is low relative to its total equity, at 7.22%. This range is considered safe as NATR is not taking on too much debt obligation, which may be constraining for future growth. NATR’s risk around capital structure is almost non-existent, and the company has the headroom and ability to raise debt should it need to in the future.
NATR’s high cash coverage and low debt levels indicate its ability to utilise its borrowings efficiently in order to generate ample cash flow. Furthermore, the company exhibits proper management of current assets and upcoming liabilities. I admit this is a fairly basic analysis for NATR’s financial health. Other important fundamentals need to be considered alongside. I recommend you continue to research Nature’s Sunshine Products to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NATR’s future growth? Take a look at our free research report of analyst consensus for NATR’s outlook.
- Valuation: What is NATR worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether NATR is currently mispriced by the market.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.