USNA earnings are being released today. The move yesterday was not supported by volumes. The volumes were 54K shares which is substantially lower than the 3 month average of 184K. There were several high volume days in February when the leg of the recent uptrend started. The 52 week low was made in December, and USNA is up by more than 62% from that level already. It is poised to make new 52 week high as it is only a few percentages away from that. That depends squarely on the earnings being released shortly. If there is growth in revenues / net income accompanied with improvement in net margins, then the uptrend is likely to get much stronger, and it may continue at least till the next earnings. The stock is technically strong as it is trading above its short term averages and the 50 DMA ($47.27) is much higher than the 200 DMA of $42.77. The strength is backed by fundamentals as the company recorded good growth in revenues and net income. On a full year basis, revenues increased by more than 11% to $648.73 million and net income climbed by 32% to $66.43 million (increase in net profit margins from 8.7% to 10.1%). Even on a quarterly basis, the revenues increased from $145.95 million in Q4'11 to $168.53 million in Q4'12 (15% growth). The net income increased from $13.16 million to $18.45 million during the same period (40% growth). Consequently, the margins expanded from 9% to around 11%. The growth in this competitive business is dependent on the ability to launch new products and enter new segments from time to time. A relatively small company in supplements business, MusclePharm (MSLP), recently reported excellent growth with improvement in margins. Sales of MSLP have grown from $1 million in 2009 to $78 million in 2012. Such growth has been possible due to launch of new products from time to time. USNA can leverage its retail network and brand strength to keep up the growth with innovative offerings.
