This is part four of a multi-part series on USANA Health Sciences, Inc. (NYSE:USNA). See part one, part two and part three here.
Continued from part three: It’s always reassuring when a company’s management has ‘skin in the game’ as it were, and USANA Health Sciences, Inc. (NYSE:USNA)’s management has a large vested interest in the company. USANA’s founder and chairman of the board is Myron Wentz Ph.D, a recognized microbiologist and immunologist who founded USANA back in 1992. The CEO position is held by David Wentz, who I presume is related. Nonetheless, according to SEC documents filled back in November, Myron held slightly less than 6.6 million shares in USANA, which works out at around 47% of the company’s outstanding shares. Meanwhile, CEO David Wentz holds around 4% of the outstanding shares according to documents filled back in September. So, it would appear that management is seeking the best outcome for the company; they stand to lose a lot if things go against them.
USANA’s corporate culture
What’s more, USANA Health Sciences, Inc. (NYSE:USNA)’s management has put a significant amount of effort into developing the company’s corporate culture and is actually winning awards for its business model. Indeed, USANA won 96 national and international accolades for its products, exceptional customer service, marketing tools and strategic partnerships during 2013. These awards extended to things like ‘best place to work’, ‘best manufacturer’, ‘best customer service’, and the list goes on. All in all, it would appear that both customers and employees all enjoy working with USANA, a revelation that in itself is a reason for investment — stakeholders who like working with a company will endeavor to ensure that it succeeds.
However, there is some concern about recent FTC comments regarding a new initiative, “against deceptive advertising of weight-loss products” made by national marketers of “fad weight loss products.” Although the FTC did not name and shame in its comments, I would be willing to bet the USANA Health Sciences, Inc. (NYSE:USNA) will suffer some fall-out from this investigation. Still, the company is unlikely to be crippled, even if found guilty, as USANA is a global company, a fall in sales or even fine for “deceptive advertising” within the US could easily be recouped from other regions.
USANA under investigation
[drizzle]Oh and Pomerantz LLP a well-known firm in the area of securities litigation, announced a week ago that it was investigating USANA Health Sciences, Inc. (NYSE:USNA). Pomerantz is investigating management transactions in the company’s stock during 2012. Generally, these sort of class action lawsuits are nothing to worry about and spring up every so often, I would be willing to bet that the majority of publicly traded firms are currently under investigation. For example, within exactly 30 minutes of revealing that it had agreed a take-over yesterday, Beam Inc. was under investigation by law firm, Tripp Levy PLLC for not achieving the best price for shareholders, within four hours an additional six law firms had joined in. I think lawyers must be bored around this time of year.
Anyway, aside from the FTC worries and the trivial lawsuit, USANA Health Sciences, Inc. (NYSE:USNA) looks like a robust company with an attractive valuation, devoted management team and workforce, as well as a loyal customer base. Additionally, USANA is highly cash generative, debt free and has plenty of cash.
All in all then, USANA Health Sciences, Inc. (NYSE:USNA) may not appeal directly to value investors right now, but the company has all the pillars in place to continue growing and returning cash to investors. USANA looks to have all the desirable characteristics of a solid long-term investment, one that will pay off as earnings grind higher, the company buys back more stock and customers continue to return.
[/drizzle]
