Nu Skin (NUS) Down 7.2% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Nu Skin Enterprises (NUS). Shares have lost about 7.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nu Skin due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Nu Skin Q4 Earnings Top Estimates, Revenues Decline Y/Y
Nu Skin Enterprises posted fourth-quarter 2023 results, wherein both the top and bottom lines declined year over year while beating the Zacks Consensus Estimate.
Results were hurt by continuous macroeconomic headwinds, along with disruptions related to business transformation. Consequently, results declined in the Americas, South Korea and Europe & Africa regions during the fourth quarter. This was somewhat made up by seasonal promotional activity in Mainland China, a stable scenario in Japan and modest growth in the Hong Kong/Taiwan segment. Results reflect strength in the Rhyz business, which formed 13% of the company’s fourth-quarter revenues.
Going ahead, the company is dedicated to creating long-term enterprise value by realigning its focus to thrive in the dynamic beauty and wellness space. To this end, it plans to divide its investments evenly among three core initiatives, which include speeding up growth prospects in Rhyz, implementing a novel market expansion strategy — starting with India — expected to commence in 2025, and advancing the development of its digital-first affiliate opportunity platform.
Nu Skin posted adjusted earnings of 37 cents a share, excluding restructuring and other charges. The metric declined from the 89 cents reported in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of 29 cents.
Revenues of $488.6 million fell around 6% year over year. Revenues included a negative impact of 1% from foreign currency fluctuations. Rhyz revenues grew substantially by 101%. The top line cruised past the Zacks Consensus Estimate of $479 million.
Sales leaders were down 10% year over year to 44,059. Nu Skin’s customer base dropped 15% to 977,039. The company’s paid affiliates were down 30% to 166,866. On an adjusted basis, paid affiliates tumbled 13%.
The gross profit of $352.4 million declined from the $374.5 million reported in the year-ago quarter. The gross margin came in at 72.1%, up from the 71.7% reported in the year-ago quarter. The Nu Skin business’ gross margin came in at 77.4%, up from the 74.9% reported in the year-ago quarter.
Selling expenses declined to $181.3 million from the nearly $201 million reported in the prior-year quarter. As a percentage of revenues, the metric was 37.1%, down from the 38.5% reported in the year-ago quarter. Nu Skin business’ selling expenses were 40.8% compared with 40.5% in the prior-year quarter.
General and administrative expenses of $145 million increased from $127.7 million in the year-ago quarter. As a percentage of revenues, general and administrative expenses were 29.7%, up from 24.4% in the year-ago period.
Regional Results
Region-wise, revenues (at cc) declined 19%, 2%, 12%, 22%, 1% and 18% in the Americas, Mainland China, Southeast Asia/Pacific, South Korea, Japan and Europe & Africa, respectively, in the fourth quarter. In Hong Kong/Taiwan, revenues jumped 5% at cc. Nu Skin’s other revenues slumped 170% year over year.
Other Financial Details
Nu Skin ended the quarter with cash and cash equivalents of $256.1 million, long-term debt of $478 million and total stockholders' equity of approximately $822 million. In the reported quarter, the company paid out dividends of $19.3 million. NUS has $162.4 million remaining under the current share repurchase authorization.
Guidance
Management expects the global macro landscape to remain difficult in the near term, though it is likely to keep improving through the year. Nu Skin anticipates revenues in the band of $1.73-$1.87 billion for 2024, suggesting a 12-5% decline from the year-ago period’s reported figure. The company envisions unfavorable foreign currency impacts of roughly 1% on 2024 revenues.
Management envisions an adjusted EPS of 95 cents to $1.35. The projection suggests a decline from adjusted earnings of $1.85 recorded in 2023. On a reported basis, management anticipates earnings in the range of 75 cents-$1.15 per share compared with 17 cents delivered in 2023. Nu Skin’s bottom-line view reflects expectations of an increased global tax rate.
For the first quarter of 2024, Nu Skin expects revenues between $400 million and $435 million, including an unfavorable foreign currency impact of nearly 3-2%. The revenue projection suggests a decline of 17% to 10% from the year-ago quarter’s reported level. The company expects adjusted earnings of 0-10 cents a share. On a reported basis, NUS expects earnings between a loss of 7 cents and earnings of 3 cents per share for the first quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -85.08% due to these changes.
VGM Scores
At this time, Nu Skin has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Nu Skin has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Nu Skin belongs to the Zacks Cosmetics industry. Another stock from the same industry, Estee Lauder (EL), has gained 5.2% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Estee Lauder reported revenues of $4.28 billion in the last reported quarter, representing a year-over-year change of -7.4%. EPS of $0.88 for the same period compares with $1.54 a year ago.
For the current quarter, Estee Lauder is expected to post earnings of $0.47 per share, indicating no change from the year-ago quarter. The Zacks Consensus Estimate has changed -1% over the last 30 days.
Estee Lauder has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Nu Skin Enterprises, Inc. (NUS) : Free Stock Analysis Report
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