A mildly disappointing Q3 for AMNF. Weakness in the stock in the weeks prior to the Q3 report might easily have been due to a combination of concerns about the China slowdown and resulting overall general market weakness, and the simple expectation that since Q3 of 2014 had been so strong, it was just going to be a very tough comparable to beat. Some may have just played the odds and taken some profits.
What was surprising to me was the sharp drop in the percentage of Asian sales from 13% in Q3 2014 to only 7% in Q3 2015. That's approaching a 50% drop in sales to Asia. I would have thought that food sales would have been far less volatile than that, even if there was a China panic going on. After all, isn't food one of the last things one wants to give up when times get tough?
Still it's best if a sudden panic did lead to the sharp drop in orders. If the change was due to a competitor gaining market share rapidly, that would be much worse, since it would imply that business isn't coming back.
At any rate, since Asian sales near the end of Q3 2015 and start of Q4 2015 are reportedly stronger than the overall pace for Q4 2014, that's encouraging news to say the least. Asian sales at the end of 2014 were reported to be at their highest levels ever for AMNF. So maybe a panic buyer's strike led to some inventory getting used up (people didn't really quit eating) and AMNF might be in for a bit of a pop in Q4 2015.
I had gotten pretty excited about the growth path for AMNF after Q3 2014 since those numbers were pretty darn strong. It looked like AMNF's growth rate was ratcheting up. The first hiccup for AMNF was really the disappointing Q4 2014, which showed that the longer term pace of sales increase was really not nearly as fast as Q3 had implied. Still, both Q1 & Q2 2015 were pretty good - by Q2 AMNF set another sales record.
It's hard to get too excited about the "several exciting prospects" Pera mentions in the Q3 2015 report, since we are given no specifics at all. However, I can get excited about rising cash levels, and the prospect of AMNF paying off all of its long term debt by the end of Q2 2017. Go check out the debt levels of Coke, General Mills, Kellogg's, etc. (Yea, that's part of why I own AMNF instead!) AMNF is in a strong financial position to remain viable even if problems do develop for a while.
I do agree with AMNF's strategy of spending some on advertising to drive demand. It seems to me that the key to accelerating growth is in wider distribution rather than tinkering with recipes or additional products. AMNF's products are not available at all where I live.
I've understood that just a few distributors move a lot of product for AMNF here in the States. If AMNF can pick up new distributors or whatever it takes to give more people the opportunity to buy, that could really get things rolling.
That's another reason to own AMNF rather than an S&P 500 food company that is already worldwide - AMNF has more opportunities for expansion. Whether AMNF can make good on those opportunities remains to be seen, but at least it's within the realm of possibility.
With the somewhat disappointing Q3 2015 report, in the absence of other news, AMNF stock may languish or drift lower until the year end 2015 report in February 2016. It's a long time to wait. That's what I plan to do, though. In the meantime, I'm collecting a pretty decent and safe dividend for this market. (In fact, we are getting paid tomorrow!)
If the market wants to beat AMNF stock up too badly, I might just look for an opportunity to add back some of the shares I lost in the divorce this spring. I still have some cash making 0.01% per annum in money markets. Could get 3500+ times that return right now with AMNF. Think about that! 3.5 millennia's worth of yield from AMNF in a single year compared to the return in a money market fund. Of course, there's always risk. And 3500 times next to nothing isn't necessarily a fortune.
I agree with Amigo Mike, based on what we know so far, I'm considering Q3 2015 a non-event, though things always bear watching. Sales were down 2.4% YOY in Q3, not exactly a catastrophe yet.
Take care, all! Let me know if I'm being an idiot! Always willing to listen to new information/other points of view.
AI
