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After reading Nu Skin Enterprises, Inc.’s (NYSE:NUS) most recent earnings announcement (31 December 2018), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Nu Skin Enterprises’s performance has been impacted by industry movements. In this article I briefly touch on my key findings.
Was NUS’s weak performance lately a part of a long-term decline?
NUS’s trailing twelve-month earnings (from 31 December 2018) of US$122m has declined by -5.8% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -20%, indicating the rate at which NUS is growing has slowed down. What could be happening here? Well, let’s take a look at what’s occurring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, Nu Skin Enterprises has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. Furthermore, its return on assets (ROA) of 8.5% is below the US Personal Products industry of 13%, indicating Nu Skin Enterprises’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Nu Skin Enterprises’s debt level, has increased over the past 3 years from 22% to 25%.
What does this mean?
Though Nu Skin Enterprises’s past data is helpful, it is only one aspect of my investment thesis. Typically companies that face a drawn out period of diminishing earnings are going through some sort of reinvestment phase with the aim of keeping up with the latest industry growth and disruption. I suggest you continue to research Nu Skin Enterprises to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NUS’s future growth? Take a look at our free research report of analyst consensus for NUS’s outlook.
- Financial Health: Are NUS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. On rare occasion, data errors may occur. Thank you for reading.