Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Nu Skin Enterprises, Inc. NUS stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Nu Skin has a trailing twelve months PE ratio of 16.2, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 17.7. If we focus on the long-term PE trend, Nu Skin’s current PE level puts it below its midpoint of 16.7 over the past five years.
Further, the stock’s PE also compares favorably with the Zacks Consumer Staples sector’s trailing twelve months PE ratio, which stands at 18.4. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Nu Skin has a forward PE ratio (price relative to this year’s earnings) of just 16.4, which is higher than the current level. So, it is fair to expect an increase in the company’s share price in the near term.
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Nu Skin has a P/S ratio of about 1.3. This is lower than the S&P 500 average, which comes in at 3.2 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Nu Skin currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Nu Skin a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Nu Skin is just 1.5, a level that is far lower than the industry average of 2.6. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, NUS is a solid choice on the value front from multiple angles
What About the Stock Overall?
Though Nu Skin might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score and Momentum Score of C each. This gives NUS a Zacks VGM score — or its overarching fundamental grade — of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been somewhat mixed. The current quarter has seen one upward revision in the past sixty days compared to two downward revisions, while the full year estimate has seen three upward and one downward revision in the same time period.
This has had just a mixed impact on the consensus estimate though as the current quarter consensus estimate has decreased by 1.4% in the past two months, while the full year estimate has inched up by 0.8%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Nu Skin Enterprises, Inc. Price and Consensus
Nu Skin Enterprises, Inc. Price and Consensus | Nu Skin Enterprises, Inc. Quote
Nonetheless, the stock, with a long-term EPS growth rate of 10.9% carries a Zacks Rank #2 (Buy), which is why we are looking for outperformance from the company in the near term.
Nu Skin is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, this Zacks Rank #2 stock flaunts a solid industry rank (top 37% out of more than 250 Zacks industries), which indicates that the broader factors are favorable for the company.. In fact, over the past two years, the Zacks Cosmetics industry has clearly outperformed the broader market, as you can see below:
So, value investors might want to delve deeper in this stock as it appears to be a compelling pick.
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