The Wattle Health share price is down 60% in 2019 and at a two-year low

The Wattle Health Australia Ltd (ASX:WHA) share price has fallen significantly in 2019. Is this a buying opportunity?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Wattle Health Australia Ltd (ASX: WHA) share price continued its poor run and dropped to a two-year low of 38 cents on Thursday.

This latest decline means the infant formula and health and wellness company's shares are down almost 60% since the start of the year.

Why has the Wattle Health share price crashed lower in 2019?

Investors have been heading to the exits in their droves this year after the company's financial performance underwhelmed the market.

Last year investors were fighting to get hold of its shares on the belief that Wattle Health could be the next A2 Milk Company Ltd (ASX: A2M) or Bellamy's Australia Ltd (ASX: BAL).

But at this stage this doesn't look likely to be the case. In fact, rather than growing sales, in FY 2019 the company reported a very disappointing decline in sales.

For the 12 months to June 30, Wattle Health reported a 42% decline in sales revenue to just $0.89 million. And on the bottom line the company posted a loss of $10.3 million. This means for every $1 of product it is selling, it is losing approximately $11.60.

In addition to this, the company signed an US$85 million debt facility term sheet Gramercy Funds Management to fund the acquisition of Victoria-based manufacturing and packing facility Blend and Pack.

Investors may be concerned with the sizeable debt the company is taking on, especially given how it has yet to prove that there is sufficient demand for its products from consumers.

Should you buy the dip?

Whilst things could still come good for Wattle Health, given how competitive the market is, I'm not overly confident that the company will turn things around in the near term.

In light of this, I would stick with the bigger players in this hyper competitive market or consider a small investment in the fledgling Bubs Australia Ltd (ASX: BUB).

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Bellamy's Australia and BUBS AUST FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on 52-Week Lows

A female Woolworths customer leans on her shopping trolley as she rests her chin in her hand thinking about what to buy for dinner while also wondering why the Woolworths share price isn't doing as well as Coles recently
52-Week Lows

Why is the Woolworths share price at its lowest point since 2020?

We haven't seen Woolies shares this low since COVID.

Read more »

A bored woman looking at her computer, it's bad news.
52-Week Lows

Why this $7 billion ASX 200 stock is falling hard today

Investors were not impressed with this company's performance during the third quarter.

Read more »

a woman looks down at her phone with a look of concern on her face and her hand held to her chin while she seriously digests the news she is receiving.
52-Week Lows

3 ASX 200 shares hitting multi-year lows while the market rallies: Time to buy?

These three ASX 200 shares are missing out on the market rally.

Read more »

Female worker sitting desk with head in hand and looking fed up
52-Week Lows

Mineral Resources shares hit an almost 4-year low. What's going on?

It's been a bad few days to own this stock...

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
52-Week Lows

Why I think this ASX penny stock is a bargain at its 52-week low

This health tech share hasn't been feeling the love from the market lately. But is there an upside on the…

Read more »

Sad looking man wearing a lion mascot, symbolising a falling Liontown share price.
Resources Shares

Liontown shares at 52-week lows as lithium slump extends further

Investors aren't buyers of the lithium share at these depressed levels.

Read more »

Piggy bank sinking in water symbolising a record low share price.
Resources Shares

BHP shares hit 52-week low! Here's what brokers say will happen next

BHP shares are now the same price as they were in January 2020.

Read more »

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Materials Shares

Mineral Resources share price sinks to 52-week low: Is it a buy?

Do analysts think this beaten down mining stock is in the buy zone?

Read more »