Nature's Sunshine (NATR)

Wellness products company Nature’s Sunshine (NASDAQ:NATR) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 12% year on year to $128.3 million. The company’s full-year revenue guidance of $478 million at the midpoint came in 2.3% above analysts’ estimates. Its non-GAAP profit of $0.36 per share was significantly above analysts’ consensus estimates.

Company Overview

Started on a kitchen table in Utah, Nature’s Sunshine (NASDAQ:NATR) manufactures and sells nutritional and personal care products.

While personal care products products may seem more discretionary than food, consumers tend to maintain or even boost their spending on the category during tough times. This phenomenon is known as "the lipstick effect" by economists, which states that consumers still want some semblance of affordable luxuries like beauty and wellness when the economy is sputtering. Consumer tastes are constantly changing, and personal care companies are currently responding to the public’s increased desire for ethically produced goods by featuring natural ingredients in their products.

Competitors offering health and wellness supplements and products include Herbalife (NYSE:HLF), USANA Health Sciences (NYSE:USNA), Bellring Brands (NYSE:BRBR), and The Simply Good Foods Company (NASDAQ:SMPL).

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.

With $474.5 million in revenue over the past 12 months, Nature's Sunshine is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers.

As you can see below, Nature's Sunshine’s 2.8% annualized revenue growth over the last three years was sluggish. This shows it failed to generate demand in any major way and is a rough starting point for our analysis.

This quarter, Nature's Sunshine reported year-on-year revenue growth of 12%, and its $128.3 million of revenue exceeded Wall Street’s estimates by 6.7%.

Looking ahead, sell-side analysts expect revenue to grow 1% over the next 12 months, a slight deceleration versus the last three years. This projection doesn't excite us and suggests its products will see some demand headwinds.

Nature's Sunshine has best-in-class unit economics for a consumer staples company, enabling it to invest in areas such as marketing and talent to grow its brand. As you can see below, it averaged an elite 71.9% gross margin over the last two years. That means Nature's Sunshine only paid its suppliers $28.13 for every $100 in revenue.

Nature's Sunshine’s gross profit margin came in at 73.3% this quarter, marking a 1.9 percentage point increase from 71.3% in the same quarter last year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Operating margin is a key profitability metric because it accounts for all expenses enabling a business to operate smoothly, including marketing and advertising, IT systems, wages, and other administrative costs.

Nature's Sunshine’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 5.4% over the last two years. This profitability was mediocre for a consumer staples business and caused by its suboptimal cost structure.

Looking at the trend in its profitability, Nature's Sunshine’s operating margin might fluctuated slightly but has generally stayed the same over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Nature's Sunshine generated an operating margin profit margin of 7%, up 2.4 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, and administrative overhead.

Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

In Q3, Nature's Sunshine reported adjusted EPS of $0.36, up from $0.27 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Nature's Sunshine’s full-year EPS of $0.96 to shrink by 20.8%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Nature's Sunshine has shown mediocre cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 4.8%, subpar for a consumer staples business.

Taking a step back, an encouraging sign is that Nature's Sunshine’s margin expanded by 3.7 percentage points over the last year. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability was flat.

Nature's Sunshine’s free cash flow clocked in at $16.79 million in Q3, equivalent to a 13.1% margin. This result was good as its margin was 6.2 percentage points higher than in the same quarter last year, building on its favorable historical trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Nature's Sunshine hasn’t been the highest-quality company lately because of its poor top-line performance, it historically found a few growth initiatives that worked. Its five-year average ROIC was 17.5%, higher than most consumer staples businesses.

One of the best ways to mitigate bankruptcy risk is to hold more cash than debt.

Nature's Sunshine is a profitable, well-capitalized company with $95.55 million of cash and $14.29 million of debt on its balance sheet. This $81.27 million net cash position is 32.6% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

It was good to see Nature's Sunshine beat analysts’ revenue, EPS, and EBITDA expectations this quarter. We were also excited it lifted its full-year revenue and EBITDA guidance. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 3.8% to $14.25 immediately following the results.

Updated: December 4, 2025 at 9:47 PM EST

Before investing in or passing on Nature's Sunshine, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

Nature's Sunshine isn’t a terrible business, but it isn’t one of our picks. To begin with, its revenue growth was uninspiring over the last three years, and analysts don’t see anything changing over the next 12 months. And while its admirable gross margins are a wonderful starting point for the overall profitability of the business, the downside is its brand caters to a niche market. On top of that, its projected EPS for the next year is lacking.

Nature's Sunshine’s P/E ratio based on the next 12 months is 22.8x. Investors with a higher risk tolerance might like the company, but we don’t really see a big opportunity at the moment. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $22.50 on the company (compared to the current share price of $21.16).