E Health Company With A Compelling Turnaround Story: NUTR

Nutraceutical International Corp (NASDAQ: NUTR) is a gem in the nutritional supplements and natural food industry and a small-cap stock that investors need on their radar. The company has a long term growth history with solid profit margins, combined with a low debt ratio over past two decades.

Nutraceutical is an integrated manufacturer, distributor and retailer of branded nutritional supplements and natural products sold primarily through domestic health and natural food stores, such as Vitamin Shoppe or Lucky Vitamin. Its products are not sold through mass market retailers like Target or Walmart, so market share is limited compared to other giant competitors like Bayer (BAYZF) or GNC.

Q2 Results

The current result of FY Q2 2016 earnings release of NUTR (Jan-March 2016) beat Wall Street expectations. Revenue grew by 7.4% to $54M , and net income increased by 12% to $4.6M year-over-year. The stock price rose from $17 per share in Mar 2016, to current levels of $24.

NUTR has maintained a high quality product line while building a loyal customer base to ensure steady revenue growth with solid profit margins. Its major brands include Solaray, KAL, Nature’s Life and Life Time. In the last five years, company revenue grew at 3%-6% clip, with a net profit margin of 10%-13%. Nutraceutical has a debt-to-equity ratio of 0.29 .

The culture of the company is unique. Current CEO and Chairman of Board of Directors Frank W. Gay founded the company in 1993 and served as CEO since 1994. All the nine executive officers served the company for more than 17 years and all the six board members served in the company for more than a decade. Comparing to the high turnover rate of executive teams in the public companies, its management team is pretty stable. Employment environment has strong loyal base too. So the company’s culture is clearly to create long term growth (not an M&A style company).