- Oops!Something went wrong.Please try again later.
A month has gone by since the last earnings report for Nu Skin Enterprises (NUS). Shares have added about 3.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nu Skin due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Nu Skin Q1 Earnings Beat Estimates, Sales Rise Y/Y
Nu Skin delivered impressive first-quarter 2021 results with the top and the bottom line increasing year over year as well as beating the Zacks Consensus Estimate. Moreover, management raised its 2021 revenues and earnings view.
The company is encouraged about its recent innovations like ageLOC Boost and Nutricentials Bioadaptives. Moreover, it is optimistic about strong demand for new product introductions that are lined during the back half of 2021. These include Beauty Focus Collagen+, ageLOC Meta and a key Pharmanex product introduction. Further, the company continued to see solid momentum in the West markets, with robust adoption in social commerce business model.
Nu Skin reported quarterly earnings of 91 cents a share, which beat the Zacks Consensus Estimate of 72 cents per share and surged significantly from 36 cents reported in the year-ago quarter.
Revenues of $677 million rallied 31% year over year on a reported basis. Moreover, the top line surpassed the Zacks Consensus Estimate of $633.3 million. On a cc basis, revenues increased 25%. First-quarter revenues included a positive impact of 6% from foreign-currency fluctuations. Revenue growth can be attributed to increase in sales leaders and customer base.
Sales leaders were up 22% year over year to 60,619, while Nu Skin’s customer base increased 34% to 1,517,260. The company highlighted that its innovative beauty and wellness product efforts along with strength in its social commerce business model drove the upside.
Gross profit of $506.5 million increased from $392.2 million reported in the year-ago quarter. However, gross margin contracted year over year from 75.7% to 74.8%. That said, the metric expanded 80 basis points sequentially on the back of favorable product mix and lower air freight charges. Further, Nu Skin business’ gross margin declined to 77.8% from 78.1% reported in the prior-year quarter.
The company’s selling expenses increased from $206 million in the prior-year quarter to $273.7 million. As a percentage of sales, the metric came in at 40.4% compared with 39.8% reported in the year-ago quarter. Nu Skin business’ selling expenses were 43.4% of sales, up from 42% in the year-ago quarter. Meanwhile, general and administrative expenses of $169.8 million increased from $149.6 million in the year-ago quarter. Nevertheless, as a percentage of sales, general and administrative expenses contracted from 28.9% to 25.1%. Operating income of $62.9 million increased from $36.6 million in the year-ago quarter. Further, operating margin was 9.3%, up from 7.1% reported in the year-ago quarter. Notably, the company is on track to achieve its operating margin goal of 13%.
Segment-wise, revenues at cc basis improved 97% in Americas/Pacific, 98% in EMEA, 1% in Mainland China, 11% in Japan. However, the same declined 5% in Southeast Asia, 3% in Hong Kong/Taiwan and 9% in Other. Further, revenues were flat in South Korea at cc. Consequently, Nu Skin business’ total revenues increased 22% at cc from the prior-year quarter’s figure to $630.9 million.
Additionally, the company benefited from an impressive 69% revenue growth in the manufacturing division at cc. Also, the Grow Tech business contributed significantly to revenue growth.
Other Financial Details
Nu Skin ended the quarter with cash and cash equivalents of $339.1 million, long-term debt of $298.1 million and stockholders' equity of $871.5 million.
During the reported quarter, the company paid out dividends of $19.3 million and repurchased $50.4 million worth of shares. With this, it currently has $275.4 million remaining under the current share repurchase authorization. In a separate press release, Nu Skin announced a dividend of 38 cents per share payable on Jun 9, 2021 to shareholders of record as of May 28.
Owing to solid first-quarter results coupled with impressive growth trend for customer and sales leader, the company revised its 2021 revenue and EPS guidance upwards. Also, healthy product pipeline for 2021 is likely to contribute to the upside.
Management now expects 2021 revenues in the range of $2.80-$2.87 billion, which calls for an increase of 9-11% year over year. It anticipates favorable currency impact of 3-4% on revenues. Earlier, the company had projected the metric in the range of $2.71-$2.81 billion, indicating an increase of 5-9% year over year. Further, 2021 EPS are now projected within $4.05-$4.30, indicating an increase of 12-18%. Earlier, it had expected the metric within $3.80-$4.10 per share, suggesting an increase of 5-13%.
For the second quarter of 2021, the company projects revenues of $680-$705 million that will include favorable currency impacts of nearly 5%. The projection suggests an improvement of 11-15% year over year. Quarterly EPS is anticipated between 97 cents and $1.07, indicating 20-32% growth from the year-ago quarter’s levels.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
At this time, Nu Skin has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Nu Skin has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Nu Skin Enterprises, Inc. (NUS) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research