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Nu Skin (NUS) Down 3.4% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Nu Skin Enterprises (NUS - Free Report) . Shares have lost about 3.4% 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 the most recent earnings report in order to get a better handle on the important drivers.
Nu Skin Tops Q4 Earnings Estimates, Raises Dividend
Nu Skin reported fourth-quarter 2020 results, with the top and bottom lines increasing year over year. Also, quarterly earnings beat the Zacks Consensus Estimate. Notably, top-line growth was backed by improvements across all reporting segments.
Q4 Highlights
Nu Skin reported quarterly earnings of $1.40 a share, which beat the Zacks Consensus Estimate of $1.18 per share and surged 94% from 72 cents in the year-ago quarter.
Revenues of $748.2 million rallied 28% year over year on a reported basis. However, the top line missed the Zacks Consensus Estimate of $751 million. On a constant-currency basis, revenues increased 24%. Fourth-quarter revenues included a positive impact of 4% from foreign currency fluctuations. Revenue growth can be attributed to increase in sales leaders and customer base. Notably, revenues increased in all reporting segments with particular strength in the West markets. Sales leaders were up 29% year over year to 70,435, while Nu Skin’s customer base increased 34% to 1,557,302. Sales leader’s growth was driven by successful launch of Boost and Nutricentials products.
Gross profit of $553.4 million increased from $442.8 million reported in the year-ago quarter. However, gross margin contracted year over year from 75.9% to 74%. Nu Skin business’ gross margin also declined to 76.5% from 78.5% reported in the prior-year quarter. The downside was caused by incremental freight costs and geographic mix shift. Selling expenses increased from $228.1 million in the prior-year quarter to $284.1 million. As a percentage of sales, the metric came in at 38% compared with 39.1% reported in the year-ago quarter. Nu Skin business’ selling expenses were 40.3% of sales, down from 41.3% in the year-ago quarter.
Meanwhile, general and administrative expenses of $180.6 million increased from nearly $160 million in the year-ago quarter. Nevertheless, as a percentage of sales, general and administrative expensescontracted from 27.4% to 24.1%. Operating income of $88.7 million increased from $54.7 million in the year-ago quarter. Operating margin was 11.9%, up from 9.4% reported in the year-ago quarter.
Segmental Results
Segment-wise, revenues improved 83% in Americas/Pacific, 79% in EMEA, 10% in Southeast Asia, 12% in Japan, 10% in South Korea and 10% in Hong Kong/Taiwan. Further, revenues in Mainland China increased 11%. Consequently, Nu Skin business’ total revenues increased 27% from the prior-year quarter’s figure to $704.3 million.
Additionally, the company benefited from an impressive 42% revenue growth in the manufacturing division. In fact, strength in this unit enabled management to keep items in stock amid rising global demand and worldwide supply chain constraints. Also, the Grow Tech business contributed significantlyto revenue growth.
Other Financial Details
Nu Skin ended the quarter with cash and cash equivalents of $402.7 million, long-term debt of $305.4 million and stockholders' equity of $894.3 million.
During the reported quarter, the company paid out dividends of $19.1 million and repurchased $17 million worth of shares. With this, it now has $325.8 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 Mar 10, 2021 to shareholders of record as of Feb 26. This represents an increase from 37.5 cents per share paid in the preceding quarter. Notably, this is the company’s 20th consecutive year of paying as well as increasing dividend.
Additionally, the company also announced that its President Ryan Napierski is to assume the role of president and chief executive officer effective Sep 1. Notably, Ryan Napierski is succeeding Ritch Wood, who has a 30-year career with Nu Skin.
Guidance
The company is optimistic about momentum in 2021, driven by impressive product pipeline, robust digital efforts along with steady improvement in customers and sales leaders. Keeping along these lines, management expects to expand its customer reach via the launch of Boost and Nutricentials products in the first half of 2021. Further, Nu Skin expects to unveil new products in the remaining half of the year.
For the first quarter of 2021, the company projects revenues of $610-$640 million that will include favorable currency impacts of nearly 3%. The projection suggests an improvement of 18-24% year over year. Earnings are anticipated between 65 cents and 75 cents per share, indicating significant growth from the year-ago quarter’s levels.
Management expects 2021 revenues in the range of $2.71-$2.81 billion, which calls for an increase of 5-9% year over year. It anticipates favorable currency impact of 2-3% on revenues. Further, 2021 earnings are projected within $3.80-$4.10 per share, indicating an increase of 5-13%.
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 -7.54% due to these changes.
VGM Scores
At this time, Nu Skin has a strong Growth Score of A, though it is lagging a lot 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Nu Skin has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Nu Skin (NUS) Down 3.4% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Nu Skin Enterprises (NUS - Free Report) . Shares have lost about 3.4% 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 the most recent earnings report in order to get a better handle on the important drivers.
Nu Skin Tops Q4 Earnings Estimates, Raises Dividend
Nu Skin reported fourth-quarter 2020 results, with the top and bottom lines increasing year over year. Also, quarterly earnings beat the Zacks Consensus Estimate. Notably, top-line growth was backed by improvements across all reporting segments.
Q4 Highlights
Nu Skin reported quarterly earnings of $1.40 a share, which beat the Zacks Consensus Estimate of $1.18 per share and surged 94% from 72 cents in the year-ago quarter.
Revenues of $748.2 million rallied 28% year over year on a reported basis. However, the top line missed the Zacks Consensus Estimate of $751 million. On a constant-currency basis, revenues increased 24%. Fourth-quarter revenues included a positive impact of 4% from foreign currency fluctuations. Revenue growth can be attributed to increase in sales leaders and customer base. Notably, revenues increased in all reporting segments with particular strength in the West markets. Sales leaders were up 29% year over year to 70,435, while Nu Skin’s customer base increased 34% to 1,557,302. Sales leader’s growth was driven by successful launch of Boost and Nutricentials products.
Gross profit of $553.4 million increased from $442.8 million reported in the year-ago quarter. However, gross margin contracted year over year from 75.9% to 74%. Nu Skin business’ gross margin also declined to 76.5% from 78.5% reported in the prior-year quarter. The downside was caused by incremental freight costs and geographic mix shift. Selling expenses increased from $228.1 million in the prior-year quarter to $284.1 million. As a percentage of sales, the metric came in at 38% compared with 39.1% reported in the year-ago quarter. Nu Skin business’ selling expenses were 40.3% of sales, down from 41.3% in the year-ago quarter.
Meanwhile, general and administrative expenses of $180.6 million increased from nearly $160 million in the year-ago quarter. Nevertheless, as a percentage of sales, general and administrative expensescontracted from 27.4% to 24.1%. Operating income of $88.7 million increased from $54.7 million in the year-ago quarter. Operating margin was 11.9%, up from 9.4% reported in the year-ago quarter.
Segmental Results
Segment-wise, revenues improved 83% in Americas/Pacific, 79% in EMEA, 10% in Southeast Asia, 12% in Japan, 10% in South Korea and 10% in Hong Kong/Taiwan. Further, revenues in Mainland China increased 11%. Consequently, Nu Skin business’ total revenues increased 27% from the prior-year quarter’s figure to $704.3 million.
Additionally, the company benefited from an impressive 42% revenue growth in the manufacturing division. In fact, strength in this unit enabled management to keep items in stock amid rising global demand and worldwide supply chain constraints. Also, the Grow Tech business contributed significantlyto revenue growth.
Other Financial Details
Nu Skin ended the quarter with cash and cash equivalents of $402.7 million, long-term debt of $305.4 million and stockholders' equity of $894.3 million.
During the reported quarter, the company paid out dividends of $19.1 million and repurchased $17 million worth of shares. With this, it now has $325.8 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 Mar 10, 2021 to shareholders of record as of Feb 26. This represents an increase from 37.5 cents per share paid in the preceding quarter. Notably, this is the company’s 20th consecutive year of paying as well as increasing dividend.
Additionally, the company also announced that its President Ryan Napierski is to assume the role of president and chief executive officer effective Sep 1. Notably, Ryan Napierski is succeeding Ritch Wood, who has a 30-year career with Nu Skin.
Guidance
The company is optimistic about momentum in 2021, driven by impressive product pipeline, robust digital efforts along with steady improvement in customers and sales leaders. Keeping along these lines, management expects to expand its customer reach via the launch of Boost and Nutricentials products in the first half of 2021. Further, Nu Skin expects to unveil new products in the remaining half of the year.
For the first quarter of 2021, the company projects revenues of $610-$640 million that will include favorable currency impacts of nearly 3%. The projection suggests an improvement of 18-24% year over year. Earnings are anticipated between 65 cents and 75 cents per share, indicating significant growth from the year-ago quarter’s levels.
Management expects 2021 revenues in the range of $2.71-$2.81 billion, which calls for an increase of 5-9% year over year. It anticipates favorable currency impact of 2-3% on revenues. Further, 2021 earnings are projected within $3.80-$4.10 per share, indicating an increase of 5-13%.
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 -7.54% due to these changes.
VGM Scores
At this time, Nu Skin has a strong Growth Score of A, though it is lagging a lot 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Nu Skin has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.