Intrinsic value of USANA Health Sciences - USNA

Previous Close

$57.40

  Intrinsic Value

$89.06

stock screener

  Rating & Target

str. buy

+55%

  Value-price divergence*

+34%

Previous close

$57.40

 
Intrinsic value

$89.06

 
Up/down potential

+55%

 
Rating

str. buy

 
Value-price divergence*

+34%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of USNA stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.47
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
Revenue, $m
  1,006
  1,069
  1,135
  1,204
  1,276
  1,350
  1,428
  1,510
  1,594
  1,683
  1,776
  1,872
  1,974
  2,080
  2,191
  2,307
  2,428
  2,555
  2,689
  2,828
  2,975
  3,128
  3,289
  3,458
  3,635
  3,820
  4,015
  4,219
  4,433
  4,657
  4,893
Variable operating expenses, $m
 
  905
  960
  1,018
  1,079
  1,142
  1,208
  1,276
  1,348
  1,423
  1,501
  1,581
  1,666
  1,756
  1,849
  1,947
  2,050
  2,158
  2,270
  2,388
  2,512
  2,641
  2,777
  2,919
  3,069
  3,225
  3,390
  3,562
  3,743
  3,932
  4,131
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  867
  905
  960
  1,018
  1,079
  1,142
  1,208
  1,276
  1,348
  1,423
  1,501
  1,581
  1,666
  1,756
  1,849
  1,947
  2,050
  2,158
  2,270
  2,388
  2,512
  2,641
  2,777
  2,919
  3,069
  3,225
  3,390
  3,562
  3,743
  3,932
  4,131
Operating income, $m
  139
  165
  175
  186
  197
  209
  221
  233
  247
  260
  275
  292
  307
  324
  341
  359
  378
  398
  419
  440
  463
  487
  512
  538
  566
  595
  625
  657
  690
  725
  762
EBITDA, $m
  152
  179
  190
  201
  213
  226
  239
  252
  267
  281
  297
  313
  330
  348
  366
  386
  406
  427
  450
  473
  497
  523
  550
  578
  608
  639
  671
  705
  741
  779
  818
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  19
Earnings before tax, $m
  139
  165
  175
  185
  196
  207
  219
  231
  244
  257
  271
  288
  303
  319
  336
  353
  371
  391
  411
  432
  454
  477
  501
  527
  553
  581
  611
  642
  674
  708
  743
Tax expense, $m
  39
  44
  47
  50
  53
  56
  59
  62
  66
  69
  73
  78
  82
  86
  91
  95
  100
  105
  111
  117
  123
  129
  135
  142
  149
  157
  165
  173
  182
  191
  201
Net income, $m
  100
  120
  128
  135
  143
  151
  160
  169
  178
  188
  198
  210
  221
  233
  245
  258
  271
  285
  300
  315
  331
  348
  366
  385
  404
  424
  446
  468
  492
  517
  543

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  176
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  471
  314
  333
  353
  374
  396
  419
  443
  468
  494
  521
  549
  579
  610
  642
  676
  712
  749
  788
  829
  872
  917
  965
  1,014
  1,066
  1,120
  1,177
  1,237
  1,300
  1,366
  1,435
Adjusted assets (=assets-cash), $m
  295
  314
  333
  353
  374
  396
  419
  443
  468
  494
  521
  549
  579
  610
  642
  676
  712
  749
  788
  829
  872
  917
  965
  1,014
  1,066
  1,120
  1,177
  1,237
  1,300
  1,366
  1,435
Revenue / Adjusted assets
  3.410
  3.404
  3.408
  3.411
  3.412
  3.409
  3.408
  3.409
  3.406
  3.407
  3.409
  3.410
  3.409
  3.410
  3.413
  3.413
  3.410
  3.411
  3.412
  3.411
  3.412
  3.411
  3.408
  3.410
  3.410
  3.411
  3.411
  3.411
  3.410
  3.409
  3.410
Average production assets, $m
  131
  139
  148
  157
  166
  176
  186
  196
  207
  219
  231
  243
  257
  270
  285
  300
  316
  332
  350
  368
  387
  407
  428
  449
  472
  497
  522
  548
  576
  605
  636
Working capital, $m
  140
  -38
  -41
  -43
  -46
  -49
  -51
  -54
  -57
  -61
  -64
  -67
  -71
  -75
  -79
  -83
  -87
  -92
  -97
  -102
  -107
  -113
  -118
  -124
  -131
  -138
  -145
  -152
  -160
  -168
  -176
Total debt, $m
  0
  9
  19
  29
  39
  50
  61
  73
  85
  98
  112
  126
  141
  156
  172
  189
  206
  225
  244
  265
  286
  308
  331
  356
  382
  409
  437
  466
  497
  530
  564
Total liabilities, $m
  145
  155
  165
  175
  185
  196
  207
  219
  231
  244
  258
  272
  287
  302
  318
  335
  352
  371
  390
  411
  432
  454
  477
  502
  528
  555
  583
  612
  643
  676
  710
Total equity, $m
  325
  158
  168
  178
  189
  200
  212
  224
  236
  249
  263
  277
  292
  308
  324
  342
  360
  378
  398
  419
  441
  463
  487
  512
  538
  566
  595
  625
  656
  690
  725
Total liabilities and equity, $m
  470
  313
  333
  353
  374
  396
  419
  443
  467
  493
  521
  549
  579
  610
  642
  677
  712
  749
  788
  830
  873
  917
  964
  1,014
  1,066
  1,121
  1,178
  1,237
  1,299
  1,366
  1,435
Debt-to-equity ratio
  0.000
  0.060
  0.110
  0.160
  0.210
  0.250
  0.290
  0.330
  0.360
  0.390
  0.420
  0.450
  0.480
  0.510
  0.530
  0.550
  0.570
  0.590
  0.610
  0.630
  0.650
  0.670
  0.680
  0.700
  0.710
  0.720
  0.730
  0.750
  0.760
  0.770
  0.780
Adjusted equity ratio
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505
  0.505

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  100
  120
  128
  135
  143
  151
  160
  169
  178
  188
  198
  210
  221
  233
  245
  258
  271
  285
  300
  315
  331
  348
  366
  385
  404
  424
  446
  468
  492
  517
  543
Depreciation, amort., depletion, $m
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  22
  23
  24
  25
  27
  28
  29
  31
  33
  34
  36
  38
  40
  42
  44
  46
  49
  51
  54
  56
Funds from operations, $m
  148
  134
  142
  151
  159
  168
  178
  188
  198
  209
  220
  232
  244
  257
  270
  284
  299
  315
  331
  348
  366
  384
  404
  424
  446
  468
  492
  517
  543
  570
  599
Change in working capital, $m
  11
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
Cash from operations, $m
  137
  137
  145
  153
  162
  171
  181
  191
  201
  212
  224
  235
  247
  261
  274
  288
  303
  319
  336
  353
  371
  390
  410
  430
  452
  475
  499
  524
  551
  578
  607
Maintenance CAPEX, $m
  0
  -12
  -12
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
New CAPEX, $m
  -33
  -9
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
Cash from investing activities, $m
  -32
  -21
  -21
  -22
  -23
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -38
  -40
  -43
  -45
  -46
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -73
  -77
  -80
  -85
Free cash flow, $m
  105
  117
  124
  131
  139
  147
  155
  164
  173
  182
  192
  202
  213
  224
  236
  248
  261
  275
  289
  304
  319
  336
  353
  371
  389
  409
  430
  451
  474
  498
  523
Issuance/(repayment) of debt, $m
  0
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  34
Issuance/(repurchase) of shares, $m
  -65
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -65
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  34
Total cash flow (excl. dividends), $m
  33
  126
  133
  141
  149
  158
  166
  176
  185
  195
  206
  216
  227
  239
  252
  265
  279
  293
  308
  324
  341
  358
  376
  395
  415
  436
  458
  481
  505
  531
  557
Retained Cash Flow (-), $m
  -44
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
Prev. year cash balance distribution, $m
 
  176
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  292
  124
  131
  139
  147
  155
  164
  173
  182
  192
  202
  212
  224
  236
  248
  261
  274
  288
  303
  319
  335
  352
  370
  389
  409
  429
  451
  474
  497
  522
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  280
  113
  114
  114
  114
  112
  110
  108
  105
  101
  96
  91
  85
  79
  73
  66
  60
  53
  47
  41
  35
  29
  24
  20
  16
  13
  10
  7
  5
  4
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

USANA Health Sciences, Inc. develops, manufactures, and sells science-based nutritional and personal care products primarily to reduce the risk of chronic degenerative disease. The company offers USANA Nutritionals Essentials product line, which includes vitamin and mineral supplements that provide a foundation of total body nutrition for various age groups; optimizers comprising targeted supplements that are designed to meet cardiovascular, skeletal/structural, and digestive health needs; and foods that include low-glycemic meal replacement shakes, snack bars, and other related products, which provide macro-nutrition. It also provides Sensé—beautiful science products, such as personal care products that support healthy skin and hair through topical nourishment, moisturization, and protection; and other products for prenatal, infant, and young child age groups. In addition, the company offers materials and online tools, such as associate starter kit and product brochures to assist associates in building their businesses, as well as in marketing products. It offers its products directly in the Asia Pacific, the Americas, and Europe. USANA Health Sciences, Inc. was founded in 1992 and is headquartered in Salt Lake City, Utah.

FINANCIAL RATIOS  of  USANA Health Sciences (USNA)

Valuation Ratios
P/E Ratio 14.1
Price to Sales 1.4
Price to Book 4.3
Price to Tangible Book
Price to Cash Flow 10.3
Price to Free Cash Flow 13.5
Growth Rates
Sales Growth Rate 9.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 37.5%
Cap. Spend. - 3 Yr. Gr. Rate 32.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 22.4%
Ret/ On Assets - 3 Yr. Avg. 22.8%
Return On Total Capital 33%
Ret/ On T. Cap. - 3 Yr. Avg. 33.8%
Return On Equity 33%
Return On Equity - 3 Yr. Avg. 33.8%
Asset Turnover 2.3
Profitability Ratios
Gross Margin 82.1%
Gross Margin - 3 Yr. Avg. 82.3%
EBITDA Margin 15.1%
EBITDA Margin - 3 Yr. Avg. 15.9%
Operating Margin 13.8%
Oper. Margin - 3 Yr. Avg. 14.7%
Pre-Tax Margin 13.8%
Pre-Tax Margin - 3 Yr. Avg. 14.7%
Net Profit Margin 9.9%
Net Profit Margin - 3 Yr. Avg. 10%
Effective Tax Rate 28.1%
Eff/ Tax Rate - 3 Yr. Avg. 31.7%
Payout Ratio 0%

USNA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the USNA stock intrinsic value calculation we used $1006 million for the last fiscal year's total revenue generated by USANA Health Sciences. The default revenue input number comes from 2016 income statement of USANA Health Sciences. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our USNA stock valuation model: a) initial revenue growth rate of 6.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for USNA is calculated based on our internal credit rating of USANA Health Sciences, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of USANA Health Sciences.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of USNA stock the variable cost ratio is equal to 84.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for USNA stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for USANA Health Sciences.

Corporate tax rate of 27% is the nominal tax rate for USANA Health Sciences. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the USNA stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for USNA are equal to 13%.

Life of production assets of 11.3 years is the average useful life of capital assets used in USANA Health Sciences operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for USNA is equal to -3.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $325 million for USANA Health Sciences - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 23.933 million for USANA Health Sciences is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of USANA Health Sciences at the current share price and the inputted number of shares is $1.4 billion.

RELATED COMPANIES Price Int.Val. Rating
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LFVN Lifevantage 2.92 12.60  str.buy
MTEX Mannatech 15.90 61.60  str.buy
NUS Nu Skin Enterp 57.41 85.70  buy
NATR Nature's S 10.05 8.75  sell
NUTR Nutraceutical 41.75 27.42  sell
AVP Avon Products 2.64 0.28  str.sell
MED Medifast 55.63 31.16  sell
HLF Herbalife 68.04 67.76  hold

COMPANY NEWS

▶ USANA Health posts 2Q profit   [12:33AM  Associated Press]
▶ Herbalifes Earnings Are Expected to Fall in 2Q17   [Jul-21-17 01:39PM  Market Realist]
▶ Two USANA Executives Honored by Utah Business Magazine   [Jun-22-17 03:30PM  PR Newswire]
▶ Get Manly This June for National Men's Health Month   [Jun-15-17 11:58AM  PR Newswire]
▶ USANA Enjoys Continued Success at Best of State Awards   [May-18-17 12:00PM  PR Newswire]
▶ GET YOUR SERVICE ON - #USANAgives & you can too   [May-17-17 08:07AM  PR Newswire]
▶ USANA Health posts 1Q profit   [May-02-17 06:55PM  Associated Press]
▶ USANA Goes Green For Arbor Day   [Apr-28-17 12:30PM  PR Newswire]
▶ Five Small-Caps For The Long-Term Investor   [Apr-12-17 11:13AM  Forbes]
▶ Pick Health as Your National Champion   [Mar-22-17 03:43PM  PR Newswire]
Stock chart of USNA Financial statements of USNA
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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