Nutraceutical Int'l Corp. (NUTR)

Nutraceutical is an integrated manufacturer, marketer, distributor and retailer of branded nutritional supplements and other natural products sold primarily to and through domestic health and natural food stores. It sells natural products under the various brands including KAL, Nature's Life, Pioneer, Natural Sport, FunFresh Foods, Action Labs, Thompson and Monarch Nutritional Laboratories. The company also prints and markets a line of books and booklets under the brand Woodland Publishing.

The company’s business is characterized by seasonality. Sales to any particular customer can vary substantially from one quarter to the next, based on industry trends, timing of promotional discounts and acquisition-related activities. The company’s brands face a stiff competition from financial strong companies like Whole Foods Market, Wild Oats market, United Natural Foods and Natural Health Trends.

During the three months ended December 2006, the company made three acquisitions. In October 2006, the company acquired a majority interest in a complementary natural products business. In November 2006, it acquired the Life-flo brand of health care products. In December 2006, it further acquired the Larenim brand of mineral makeup. Although the number of brands in the company’s portfolio increases, there is little addition to the quality and variety of products, and the revenues thereof.

The company has been witnessing a falling trend in sales since past three consecutive years additionally facing an uneven net income trend. For the three months ended December 2006, Nutraceutical's revenues fell 2.3% to $35.8M reflecting a comprehensive decrease in demand for the company's products. Further the consolidation and integration of acquisitions would be completed only in the third quarter of 2007. Given such a scenario of past and present, the future does not look very bright for the company in the near future atleast, making it a poor investment proposition.