Assessing Natural Health Trends Corp’s (NASDAQ:NHTC) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess NHTC’s latest performance announced on 30 September 2017 and evaluate these figures to its historical trend and industry movements. See our latest analysis for NHTC

Was NHTC weak performance lately part of a long-term decline?

For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to assess various companies on a similar basis, using the latest information. Natural Health Trends’s latest twelve-month earnings is $47M, which, in comparison to last year’s level, has plunged by -5.27%. Since these figures may be somewhat nearsighted, I have computed an annualized five-year value for Natural Health Trends’s earnings, which stands at $21M. This means while earnings growth was negative against last year, over a longer period of time, Natural Health Trends’s earnings have been rising on average.

What’s the driver of this growth? Let’s see if it is merely owing to industry tailwinds, or if Natural Health Trends has experienced some company-specific growth. In the last couple of years, Natural Health Trends expanded its bottom line faster than revenue by successfully controlling its costs. This resulted in a margin expansion and profitability over time. Looking at growth from a sector-level, the US personal products industry has been growing its average earnings by double-digit 14.86% over the prior year, and a less exciting 3.94% over the previous five years. This suggests that whatever uplift the industry is profiting from, Natural Health Trends has not been able to gain as much as its average peer.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies are profitable, but have volatile earnings, can have many factors influencing its business. I recommend you continue to research Natural Health Trends to get a more holistic view of the stock by looking at:

1. Financial Health: Is NHTC’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

2. Valuation: What is NHTC 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 NHTC is currently mispriced by the market.

3. 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.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.