Today I will look at five stocks, each with ties to the highly profitable weight-loss industry. My discussion will take us through the financials of these five companies. As we will see, some of these companies hold great promise for dieters and those suffering from type 2 diabetes. Some of these companies could also be good investment candidates. The five companies I will look at are Weight Watchers International (WTW), USANA Health Sciences (USNA), GNC Holdings (GNC), Walgreen (WAG), and ChromaDex (CDXC.OB).
Weight Watchers International, trading at about $51. This juggernaut has a market cap just south of $3 billion and sports an attractive price to earnings ratio of 13.31. It also has a great price to earnings growth ratio of 0.75. There is no price to book as the result of a negative book value per share of -$28.55. Return on equity is unreported also…not a good sign. Meanwhile, quarterly year-over-year revenue and earnings growth break bad, with revenue in the “N/A” category and earnings in negative territory at -25.80. A review of the last 4 quarters show modest improvement in revenue growth but shrinking net income. The balance sheet reveals some serious long term debt with very little on the cash and cash equivalent side as an offset. The company’s financial strength is marginal and the stock is overvalued on a discounted cash flow basis by more than 41%. There is no published debt to equity ratio and the current ratio is an embarrassing 0.18. To continue reading, click here.