Consumer Goods Showdown: Peloton Interactive (PTON) vs. Mannatech (MTEX)

In this article, I’ve assessed the potential of two well-known consumer goods stocks, Peloton Interactive, Inc. (PTON) and Mannatech, Incorporated (MTEX), aiming to identify the better buy. Following a fundamental comparison, I think MTEX offers a more appealing investment prospect.

Before analyzing these stocks, let’s explore the current consumer goods landscape.

In August, personal Income increased by $87.6 billion, or 0.4% monthly. Disposable Personal Income (DPI) experienced a rise of $46.6 billion (0.2%). During the same month, Personal Consumption Expenditures (PCE) increased by $83.6 billion (0.4%).

Moreover, the U.S. job market exhibited unexpected strength in September despite challenges such as higher interest rates, labor disputes, and political issues. According to the Labor Department, nonfarm payrolls increased by 336,000, surpassing expectations (estimated at 170,000) and exceeding the previous month by over 100,000.

These solid data suggest a positive outlook for the consumer goods industry, indicating that consumers have more confidence and money at their disposal and are willing to spend it.

Further, the global consumer goods industry is expected to grow at a CAGR of 7.8% to reach $224.33 billion by 2032. This growth is expected to be driven by the industry's ability to adapt to evolving trends, spurred by digital innovation, the transformative impact of the pandemic, and an increasing emphasis on sustainable living.

In terms of price performance, MTEX gained 2.2% intraday while PTON soared marginally. However, over the past nine months, MTEX has plummeted 41%, and PTON has declined 56.4%.

Nevertheless, here are the reasons why MTEX could potentially perform better in the near term:

Latest Developments

On October 17, 2023, PTON revealed its entry into the Austrian market, marking its fifth international expansion beyond the U.S. through an extended partnership with Amazon.com Inc. (AMZN). Additionally, Sport-Tiedje, Europe's largest specialist retailer for home fitness equipment, will offer PTON’s Bike, Bike+, Tread, and select accessories.

On the other hand, on June 16, MTEX launched a new tiered affiliate program through its subsidiary, Trulu™. The program introduces AMPM powders designed to boost energy, mood, sleep, and gut health. This innovation aims to expand market reach and leverage the gig economy.

Recent Financial Results

PTON’s revenues declined 5.4% year-over-year to $642.10 million in the fiscal fourth quarter that ended June 30, 2023. Its loss from operations stood at $225.80 million, and its adjusted EBITDA loss amounted to $34.70 million. The company reported a net loss of $241.80 million and $0.68 per share.

In contrast, MTEX reported net sales of $32.59 million for the second quarter ended June 30, 2023. Its gross profit came in at $25.59 million. The company’s current assets stood at $31.25 million as of June 30. 2023. Its current liabilities lowered to $28.24 million as of June 30, 2023, compared to $29.84 million as of December 31, 2022.

Dividend Payout

While PTON doesn’t pay dividends, MTEX pays an annual dividend of $0.80, which translates to an 8.21% yield on the current market price. Its four-year average dividend yield is 6.40%. MTEX’s dividend payouts have grown at CAGRs of 3.9% over the past three.

Profitability

MTEX is more profitable, with a trailing-12-month gross profit margin of 76.23%, compared to PTON’s 32.98%. MTEX’s trailing-12-month asset turnover ratio of 2.62x is higher than PTON’s 0.82x.

Moreover, PTON’s trailing-12-month cash per share of $2.28 is lower than MTEX’s $5.02.

Valuation

In terms of trailing-12-month EV/Sales, MTEX is currently trading at 0.12x, lower than PTON, which is trading at 1.22x. MTEX’s forward P/S multiple of 0.13 is lower than PTON’s 0.64.

Hence, MTEX is more affordable.

POWR Ratings

PTON has an overall rating of D, translating to Sell in our proprietary POWR Ratings system. MTEX, on the other hand, has an overall rating of B, which equates to a Buy. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. PTON has a grade of D for Quality. Its trailing-12-month gross profit margin of 32.98% is 7.1% lower than the 35.50% industry average. Its trailing-12-month asset turnover of 0.82x is 18.3% lower than the industry average of 1.01x.

However, MTEX has a grade of A for Quality. Its trailing-12-month gross profit margin of 76.23% is 127.8% higher than the 33.46% industry average. Also, its trailing-12-month asset turnover of 2.62x is 206.2% higher than the industry average of 0.86x.

In the 54-stock Consumer Goods industry, PTON is ranked #45, while MTEX is ranked #4.

Beyond what we’ve stated above, we have also rated both stocks for Growth, Value, Momentum, Stability, and Sentiment. Get all PTON ratings here. Access MTEX ratings here.

The Winner

The consumer goods industry is set for substantial growth in the upcoming months, supported by robust consumer spending. Moreover, the upcoming holiday season should significantly boost the consumer goods industry’s performance.

Although both PTON and MTEX have the potential to benefit from favorable industry trends, PTON’s weak profitability and elevated valuation multiples indicate that MTEX is the wiser investment choice.

Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Consumer Goods industry here.

What To Do Next?

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MTEX shares were trading at $9.73 per share on Wednesday morning, up $0.23 (+2.42%). Year-to-date, MTEX has declined -44.20%, versus a 15.00% rise in the benchmark S&P 500 index during the same period.

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.

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