NB Stock Index Up 29.5% Year-to-Date
Published: Saturday, November 01, 1997
by Chuck Slotkin
NEW YORK—The Natural Business Composite Index™ (NBCI) showed great resilience through the turbulent market fluctuations of late last month, increasing by 1.3% from Sept. 25 to Oct. 30.
The NBCI’s robust performance was remarkable in that the main market indices were clobbered in this same period—Nasdaq, the Dow Jones Industrial Average (DJIA), and Standard and Poor’s 500 (S&P 500) were down 6.5%, 5.9% and 3.6% respectively. Prior to the market drop, the year-to-date performance of the NBCI had been lagging behind the Nasdaq and S&P 500. Now, the NBCI’s year-to-date increase of 29.5% far outstrips the 21.6% Nasdaq increase, the 14.5% DJIA increase, and the 22.0% S&P 500 increase.
At a glance, the 61 companies represented in the NBCI weathered October’s storm, which saw the DJIA drop 554 points in one day on Oct. 27, quite well, with 25 companies reporting gains, 31 reporting losses and five remaining unchanged. For the year-to-date comparison, the NBCI companies are much stronger, with 37 reporting gains, 20 losses and two unchanged (year-to-date figures were unavailable for two companies). The strong year-to-date performance of NBCI companies is spearheaded by increases in the Retail & Distribution group.
A clearer picture of what happened to the value of publicly held companies in the natural products industry over the last month, and for the year-to-date, is obtained by analyzing the performance of the major company groupings that comprise the NBCI.
Botanicals & Dietary Supplements
This group of 32 companies performed well from Sept. 25 to Oct. 30, in light of the market turbulence, with 41% of the companies reporting gains and the remainder either losses or no change. 4Health Inc. (HHHH), up 42.9%, reported the largest gain in this grouping (4Health recently announced a merger with privately held Irwin Naturals). The average gain for the companies reporting gains was 14.7%, with a median increase of 8.6%. Of those companies reporting losses, the average loss for the time period was 19.2%, with a median loss of 13.9%. For the year-to-date comparison, the sector has 15 companies with stock prices up, 15 down and one unchanged (data unavailable for one company). The average price-to-earnings ratio (P/E) for this group is 24.9, with most companies coming in near this value, which is indicative of a profitable sector with strong earnings prospects for the future.
Food & Beverage
Strong gains for Vermont Pure Holdings (VPUR) and Lifeway (LWAY), up 67.5% and 47.8%, respectively, led this sector’s good performance in October. While 11 of the 18 companies in this grouping reported losses for the month, the fact that the other seven were up, and some substantially so, reflects a high level of confidence in this sector of the natural products industry. At the year-to-date level this group’s performance is stellar, with 14 companies reporting gains and only three, losses (data unavailable for one company). The average gain was 69.7%. The average P/E ratio of 46.3 (excluding Organic Food Products’ outlying P/E) is less of an indicator of strong growth and profitability than it is a sign of earnings volatility of the group. Continual volatility in the future is likely.
Consumer & Personal Care Products
This group showed lackluster performance in October. Only one of six companies, Healthy Planet Products (HPP), up 15.5%, reported a gain, and one was unchanged. The remaining four companies had moderate decreases, the worst of which was 10.6% for RMED International Inc. (TUSH). For the year-to-date comparison the group is characterized by moderate to poor performance, with the notable exception of Senetek PLC, which is up by 260% this year. This is the largest gain in the entire NBCI. P/E ratios are not considered here because earnings are depressed or nonexistent for all of these companies except CNS Inc. (CNXS).
Retail & Distribution
For October, four of the five companies in the group were up while only one fell—Body Shop International (BDSPY), down 6.7%. Wild Oats Markets jumped 21.4% in the month, boasting the highest gain. The remaining three companies had single-digit gains. For the year-to-date, the group as a whole is up 70.7%, much more than any of the other groups. In fact, of the four NBCI company groups, the Retail group is the only one reporting an increase greater than the NBCI as a whole, indicating that this group’s strength plays a large part in NBCI’s strong performance this year. A tightly knit group of P/E ratios for the companies in this group, with an average of 26.2, further supports a strong outlook.
Chuck Slotkin is president of Nature’s Equity, a New York-based investment banking and business development firm specializing in the natural products industry. Solomon J. Halpern contributed to this report.