Betterware De Mexico: Great Value, Good Growth, Average Quality

Gabriel Romano, CFA
105 Followers
(17min)

Summary

  • Betterware's pandemic-driven growth has faded, with margins and efficiency declining amid rising competition and inventory challenges.
  • Despite a moderate moat from its distribution network and asset-light model, the business faces intense competition and risks from e-commerce and changing consumer habits.
  • My DCF analysis suggests a 15% potential upside, but this is not enough to justify a Buy given structural uncertainties and a potentially obsolete business model.
  • I will remain on the sidelines until I see a clear trend of margin improvement; next quarter's results will be key for reassessment.

Plastic kitchen equipment

sergeyryzhov/iStock via Getty Images

It has been almost 5 years since the COVID-19 pandemic, during which drastic shifts were expected regarding work and consumer behavior. People were in the house more than they ever expected and started looking into ways to

This article was written by

105 Followers
I have been involved in investing for the last 10 years, having studied a finance undergraduate, followed by a Master's in international finance, and finally getting the CFA designation. My current job focuses on advising Ultra High Net Worth individuals on how to construct their long-term portfolios, as well as any tactical deviations given the prevailing market conditions. I am also a financial consultant for a medium size leasing company on how to structure debt offerings, as well as advising on the viability for some important clients to get financing.Associated with author Eduardo Sánchez

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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