Intrinsic value of Nature's Sunshine Products - NATR

Previous Close

$9.19

  Intrinsic Value

$1.56

stock screener

  Rating & Target

str. sell

-83%

Previous close

$9.19

 
Intrinsic value

$1.56

 
Up/down potential

-83%

 
Rating

str. sell

We calculate the intrinsic value of NATR 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 0001), $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 0.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  12.20
  11.48
  10.83
  10.25
  9.72
  9.25
  8.83
  8.44
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
  5.52
  5.47
  5.42
  5.38
  5.34
Revenue, $m
  384
  428
  474
  523
  574
  627
  682
  740
  799
  862
  926
  994
  1,064
  1,136
  1,212
  1,290
  1,372
  1,457
  1,546
  1,638
  1,734
  1,835
  1,939
  2,049
  2,163
  2,282
  2,407
  2,537
  2,674
  2,817
Variable operating expenses, $m
  373
  415
  460
  508
  557
  608
  662
  718
  776
  837
  899
  965
  1,033
  1,103
  1,176
  1,253
  1,332
  1,415
  1,501
  1,590
  1,684
  1,781
  1,883
  1,989
  2,100
  2,216
  2,337
  2,463
  2,596
  2,734
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
  373
  415
  460
  508
  557
  608
  662
  718
  776
  837
  899
  965
  1,033
  1,103
  1,176
  1,253
  1,332
  1,415
  1,501
  1,590
  1,684
  1,781
  1,883
  1,989
  2,100
  2,216
  2,337
  2,463
  2,596
  2,734
Operating income, $m
  11
  12
  14
  15
  17
  18
  20
  22
  23
  25
  27
  29
  31
  33
  35
  38
  40
  43
  45
  48
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
EBITDA, $m
  21
  23
  26
  28
  31
  34
  37
  40
  43
  47
  50
  54
  58
  62
  66
  70
  75
  79
  84
  89
  94
  100
  105
  111
  118
  124
  131
  138
  145
  153
Interest expense (income), $m
  0
  1
  1
  2
  2
  3
  4
  4
  5
  5
  6
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  19
  20
  21
  22
  24
  25
  27
  29
Earnings before tax, $m
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
  34
  36
  38
  40
  42
  44
  46
  49
  51
  54
Tax expense, $m
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
Net income, $m
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  16
  16
  17
  18
  19
  20
  22
  23
  24
  25
  26
  28
  29
  31
  32
  34
  36
  37
  39

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  219
  244
  271
  298
  327
  358
  389
  422
  456
  492
  529
  567
  607
  649
  692
  736
  783
  832
  882
  935
  990
  1,047
  1,107
  1,169
  1,235
  1,303
  1,374
  1,448
  1,526
  1,608
Adjusted assets (=assets-cash), $m
  219
  244
  271
  298
  327
  358
  389
  422
  456
  492
  529
  567
  607
  649
  692
  736
  783
  832
  882
  935
  990
  1,047
  1,107
  1,169
  1,235
  1,303
  1,374
  1,448
  1,526
  1,608
Revenue / Adjusted assets
  1.753
  1.754
  1.749
  1.755
  1.755
  1.751
  1.753
  1.754
  1.752
  1.752
  1.750
  1.753
  1.753
  1.750
  1.751
  1.753
  1.752
  1.751
  1.753
  1.752
  1.752
  1.753
  1.752
  1.753
  1.751
  1.751
  1.752
  1.752
  1.752
  1.752
Average production assets, $m
  80
  89
  99
  109
  120
  131
  143
  155
  167
  180
  194
  208
  222
  237
  253
  270
  287
  305
  323
  342
  362
  383
  405
  428
  452
  477
  503
  530
  559
  589
Working capital, $m
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  22
  23
  25
  26
  28
  29
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  54
Total debt, $m
  23
  33
  43
  54
  65
  77
  89
  102
  115
  129
  143
  158
  173
  189
  206
  223
  241
  260
  280
  300
  321
  343
  367
  391
  416
  442
  470
  499
  529
  560
Total liabilities, $m
  85
  94
  105
  115
  127
  138
  151
  163
  177
  190
  205
  219
  235
  251
  268
  285
  303
  322
  341
  362
  383
  405
  428
  453
  478
  504
  532
  560
  591
  622
Total equity, $m
  134
  150
  166
  183
  201
  219
  239
  259
  280
  301
  324
  348
  372
  398
  424
  451
  480
  510
  541
  573
  607
  642
  679
  717
  757
  799
  842
  888
  936
  985
Total liabilities and equity, $m
  219
  244
  271
  298
  328
  357
  390
  422
  457
  491
  529
  567
  607
  649
  692
  736
  783
  832
  882
  935
  990
  1,047
  1,107
  1,170
  1,235
  1,303
  1,374
  1,448
  1,527
  1,607
Debt-to-equity ratio
  0.170
  0.220
  0.260
  0.290
  0.320
  0.350
  0.370
  0.390
  0.410
  0.430
  0.440
  0.450
  0.470
  0.480
  0.490
  0.490
  0.500
  0.510
  0.520
  0.520
  0.530
  0.540
  0.540
  0.550
  0.550
  0.550
  0.560
  0.560
  0.570
  0.570
Adjusted equity ratio
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  16
  16
  17
  18
  19
  20
  22
  23
  24
  25
  26
  28
  29
  31
  32
  34
  36
  37
  39
Depreciation, amort., depletion, $m
  10
  11
  12
  13
  15
  16
  17
  19
  20
  22
  23
  25
  27
  29
  31
  32
  35
  37
  39
  41
  44
  46
  49
  52
  54
  57
  61
  64
  67
  71
Funds from operations, $m
  17
  19
  21
  23
  25
  27
  29
  31
  33
  36
  38
  41
  43
  46
  49
  52
  55
  58
  62
  65
  69
  73
  77
  81
  85
  90
  94
  99
  105
  110
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
Cash from operations, $m
  17
  18
  20
  22
  24
  26
  28
  30
  32
  34
  37
  39
  42
  45
  47
  50
  53
  57
  60
  63
  67
  71
  75
  79
  83
  87
  92
  97
  102
  107
Maintenance CAPEX, $m
  -9
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -27
  -29
  -31
  -32
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -52
  -54
  -57
  -61
  -64
  -67
New CAPEX, $m
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
Cash from investing activities, $m
  -18
  -19
  -21
  -22
  -24
  -25
  -28
  -29
  -32
  -33
  -36
  -37
  -40
  -42
  -45
  -47
  -49
  -53
  -56
  -58
  -61
  -65
  -68
  -72
  -76
  -79
  -83
  -88
  -93
  -97
Free cash flow, $m
  -1
  -1
  -1
  0
  0
  0
  0
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
Issuance/(repayment) of debt, $m
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
Issuance/(repurchase) of shares, $m
  7
  7
  7
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  9
  9
  9
  9
  9
  9
  10
  10
  10
  11
Cash from financing (excl. dividends), $m  
  16
  17
  17
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  25
  25
  26
  27
  28
  28
  30
  31
  32
  33
  34
  35
  38
  39
  40
  43
Total cash flow (excl. dividends), $m
  16
  16
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  35
  37
  39
  40
  42
  44
  46
  48
  50
  53
Retained Cash Flow (-), $m
  -15
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -32
  -34
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -50
Prev. year cash balance distribution, $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 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
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
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
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  96.2
  92.8
  89.7
  87.0
  84.6
  82.4
  80.4
  78.7
  77.0
  75.6
  74.2
  73.0
  71.9
  70.8
  69.9
  69.0
  68.2
  67.4
  66.6
  65.9
  65.3
  64.6
  64.0
  63.5
  62.9
  62.4
  61.9
  61.4
  60.9
  60.4

Nature's Sunshine Products, Inc. (NSP), together with its subsidiaries, is a natural health and wellness company. The Company is engaged in the manufacturing and direct selling of nutritional and personal care products. The Company has four business segments that are divided based on the various characteristics of their distributor bases, selling and distributor compensation plans, and product formulations, as well as the internal organization and business operations. Three business segments operate under the Nature's Sunshine Products brand. The China and New Markets segment also includes the Company's wholesale business, in which the Company sells its products to various locally managed entities independent of the Company. The fourth business segment operates under the Synergy WorldWide brand. Its line of over 700 products includes various product classifications, such as immune, cardiovascular, digestive, personal care, weight management and other general health products.

FINANCIAL RATIOS  of  Nature's Sunshine Products (NATR)

Valuation Ratios
P/E Ratio 86.2
Price to Sales 0.5
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 57.5
Price to Free Cash Flow -19.2
Growth Rates
Sales Growth Rate 4.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -47.8%
Cap. Spend. - 3 Yr. Gr. Rate 5.9%
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 1%
Ret/ On Assets - 3 Yr. Avg. 4.5%
Return On Total Capital 1.5%
Ret/ On T. Cap. - 3 Yr. Avg. 7.1%
Return On Equity 1.5%
Return On Equity - 3 Yr. Avg. 7.3%
Asset Turnover 1.7
Profitability Ratios
Gross Margin 73.3%
Gross Margin - 3 Yr. Avg. 74%
EBITDA Margin 4.1%
EBITDA Margin - 3 Yr. Avg. 5.3%
Operating Margin 2.9%
Oper. Margin - 3 Yr. Avg. 4.1%
Pre-Tax Margin 2.6%
Pre-Tax Margin - 3 Yr. Avg. 3.9%
Net Profit Margin 0.6%
Net Profit Margin - 3 Yr. Avg. 2.6%
Effective Tax Rate 88.9%
Eff/ Tax Rate - 3 Yr. Avg. 30.4%
Payout Ratio 400%

NATR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NATR stock intrinsic value calculation we used $342.029 million for the last fiscal year's total revenue generated by Nature's Sunshine Products. The default revenue input number comes from 0001 income statement of Nature's Sunshine Products. 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 NATR stock valuation model: a) initial revenue growth rate of 12.2% 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 NATR is calculated based on our internal credit rating of Nature's Sunshine Products, 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 Nature's Sunshine Products.
    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 NATR stock the variable cost ratio is equal to 97.1%.

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 NATR 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 5.4% for Nature's Sunshine Products.

Corporate tax rate of 27% is the nominal tax rate for Nature's Sunshine Products. 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 NATR 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 NATR are equal to 20.9%.

Life of production assets of 8.3 years is the average useful life of capital assets used in Nature's Sunshine Products 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 NATR is equal to 1.9%. 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 - $119.732 million for Nature's Sunshine Products - 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 19.13 million for Nature's Sunshine Products 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 Nature's Sunshine Products at the current share price and the inputted number of shares is $0.2 billion.

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MTEX Mannatech 17.99 10.50  sell
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COMPANY NEWS

▶ Nature's Sunshine: 3Q Earnings Snapshot   [Nov-08-18 05:06AM  Associated Press]
▶ Nature's Sunshine: 2Q Earnings Snapshot   [Aug-07-18 05:04PM  Associated Press]
▶ Nature's Sunshine: 1Q Earnings Snapshot   [May-11-18 05:04AM  Associated Press]
▶ Natures Sunshine Celebrates Milestone 45th Anniversary   [Apr-12-17 02:00PM  GlobeNewswire]
▶ Nature's Sunshine reports 4Q loss   [Mar-07-17 05:32PM  Associated Press]
▶ Prescott Group is Betting Big on These Micro-Cap Stocks for Q2   [May-02-16 11:13AM  at Insider Monkey]

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