Natural Alternatives International Inc. (NAII)

(14 December 2016)

NAII Business Overview

Natural Alternatives International, Inc. engages in formulating, manufacturing, and marketing nutritional supplements in the United States and internationally.

NAII Fundamentals

  • Price to Earnings: 7.10
  • Earnings Per Share: $1.83
  • Market Cap: 78.0M
  • Current Ratio: 3.12
  • Return on Equity: 20.96%
  • Return on Assets: 15.73%
  • Dividend Yield: N/A
  • Total Debt to Equity Ratio: 0

Balance Sheet ($ in Thousands)

  • Total Assets increased $932.
  • Total Current Liabilities decreased $1,404.
  • Total Liabilities decreased $1,339.
  • Total Equity increased $2,271.
  • Retained Earnings increased $2,490.

Income Statement ($ in Thousands)

  • Net Sales increased $12,482.
  • Income from Operations increased $1,808.
  • Net Income increased $1,277.

Cash Flow Statement ($ in Thousands)

  • Net Cash Used in Operating Activities decreased $2,144.
  • Net Cash Used in Investing Activities increased $2,026.
  • Net Cash Used in Financing Activities decreased $93.
  • Cash at End of Period increased $1,407.

Highlights from 10-Q & News

  • Natural Alternatives Reports Q1 EPS $0.37 vs. Prior Year Quarter $0.18, Rev. $34.06M vs. Prior Year Quarter $32.58M

Entry and Exit Points

Entry Points

  • $11.50
    • It has solid support closer to the $10 level, however, it’s intrinsic value is high enough to where I would buy it at these levels. It has a 34% margin of safety at these levels.

Exit Point

  • $30
    • I picked $30 as an arbitrary point because I wouldn’t sell it if the company was still reasonably priced according to its valuation. However, if the price inflates faster than the business can operate within, I would sell at $30, take profits, and look for a better entry point for next purchase.

Overall

  • I like NAII as a deep value, small cap play. Their balance sheets are incredible, and the fact that they don’t have any debt is equally as attracting. One thing I would like to see is if they have an economic moat within their market, as well as any competitive advantages and catalysts going into the future. However, based on balance sheets, earnings, and revenue growth, I really like NAII at these prices, and would buy heavily if it dipped into the $10s.

 

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