Clinical nutrition company Guardion Health Sciences, Inc. (GHSI) recently launched Viactiv Omega BOOST gel bites, its first expansion of the Viactiv brand since the company acquired it in June 2021. The company also introduced its new branded Shopify store for its Viactiv line. Moreover, it is winding down the operations of its VectorVision as part of its ongoing comprehensive evaluation of its business.

However, the stock has lost 59.2% over the past month and 76.6% over the past three months to close yesterday’s trading session at $0.23. In addition, it is currently trading 92.4% below its 52-week high of $3.07, which it hit on March 17, 2021. Furthermore, it is currently trading below its 50-day and 200-day moving averages of $0.48 and $1.10, respectively, indicating a downtrend. So, GHSI’s near-term prospects look bleak.

Here’s what could influence GHSI’s performance in the upcoming months:

Top Line Growth Doesn’t Translate into Bottom Line Improvement

For the three months ended September 30, 2021, GHSI’s revenue surged 1,143.6% year-over-year to $3.15 million. However, its net loss increased 40.7% year-over-year to $3.01 million. In comparison, its loss per share came in at $0.12, compared to $0.15 in the year-ago period.

Selling Shares

On February 23, 2022, GHSI announced closing a public offering of 37 million shares of its common stock for gross proceeds of approximately $11.10 million before deducting placement agent fees and offering expenses. The company intends to use the net proceeds from the offering for working capital and general corporate purposes; however, this dilutes the wealth of existing shareholders.

Low Profitability

In terms of trailing-12-month CAPEX/Sales, GHSI’s 1.60% is 45.7% lower than the industry average of 2.94%. Likewise, its trailing-12-month asset turnover ratio of 0.19% is 78.1% lower than the industry average of 0.86%. Moreover, the stock’s trailing-12-month ROCE, ROTC, and ROTA are negative compared to the industry averages of 13.56%, 7.19%, and 4.88%, respectively.

POWR Ratings Reflect Bleak Prospects

GHSI has an overall rating of F, which equates to a Strong Sell in our POWR Rating system. The POWR Ratings are calculated by accounting for 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. GHSI has an F grade for Quality, in sync with its lower-than-industry profitability ratios.

The stock has a D grade for Momentum, consistent with its 81.7% loss over the past six months and 91.1% over the past year.

GHSI is ranked #62 out of 68 stocks in the D-rated Consumer Goods industry. Click here to access GHSI’s Growth, Sentiment, Stability, and Value ratings.

Bottom Line

As lower-than-industry profitability makes GHSI’s near-term prospects bleak, it is best to avoid it now.

How Does Guardion Health Sciences (GHSI) Stack Up Against its Peers?

While GHSI has an overall POWR Rating of F, you might want to consider investing in the following Consumer Goods stocks with an A (Strong Buy) or B (Buy) rating: Mannatech, Incorporated (MTEX), Société BIC SA (BICEY), and Ennis, Inc. (EBF).

GHSI shares were trading at $0.22 per share on Thursday afternoon, down $0.01 (-4.53%). Year-to-date, GHSI has declined -66.00%, versus a -10.55% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

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