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Nu Skin (NUS) Up 5.6% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Nu Skin Enterprises (NUS). Shares have added about 5.6% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Nu Skin Q1 Earnings Beat, Revenues Hurt by Currency Woes

Nu Skin posted first-quarter 2024 results, wherein both the top and bottom lines declined year over year, and revenues missed the Zacks Consensus Estimate. Foreign currency headwinds had a greater-than-anticipated impact on revenues. However, the company’s diligent cost management efforts aided its bottom-line performance.

Nu Skin posted adjusted earnings of 9 cents a share, excluding restructuring. The metric declined from the adjusted figure of 37 cents reported in the year-ago quarter. However, the bottom line surpassed the Zacks Consensus Estimate of 5 cents.

Revenues of $417.3 million tumbled 13.3% year over year. Revenues included a negative impact of 3.8% from foreign currency fluctuations. On a constant currency basis, revenues fell 9.5%. Rhyz revenues grew substantially by about 60% year over year. Nu Skin’s top line fell short of the Zacks Consensus Estimate of $431 million.

Sales leaders were down 12% year over year to 38,609. Nu Skin’s customer base dropped 19% to 875,261. The company’s paid affiliates were down 30% to 154,171. On an adjusted basis, paid affiliates tumbled 14%.

The gross profit of $294.1 million declined from the $347.9 million reported in the year-ago quarter. The gross margin came in at 70.5%, down from the 72.3% reported in the year-ago quarter. The Nu Skin business’ gross margin came in at 76.9%, up from the 76.4% reported in the year-ago quarter.

Selling expenses declined to $153.5 million from the $188.1 million reported in the prior-year quarter. As a percentage of revenues, the metric was 36.8%, down from the 39.1% reported in the year-ago quarter. Nu Skin business’ selling expenses were 41.7%, in line with the prior-year quarter.

General and administrative expenses of $124.6 million decreased from $133.9 million in the year-ago quarter. As a percentage of revenues, general and administrative expenses were 29.9%, up from 27.8% in the year-ago period. The company’s adjusted operating margin (excluding restructuring charges) contracted 160 basis points to 3.8%.

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Region-wise, revenues (at cc) declined 20.1%, 6.1%, 8.1%, 5.6%, 11.8%, 39.3% and 9.8% in the Americas, Mainland China, Southeast Asia/Pacific, Japan, Europe & Africa, South Korea and Hong Kong/Taiwan, respectively. Meanwhile, Nu Skin’s other revenues surged 684.3% year over year.

Other Financial Details & Guidance

Nu Skin ended the quarter with cash and cash equivalents of $212.5 million, long-term debt of $453.2 million and total stockholders' equity of $810.2 million. In the reported quarter, the company paid out dividends of $3 million while not making any share repurchases. NUS has $162.4 million remaining under the current share repurchase authorization.

Nu Skin remains focused on undertaking strategic measures to optimize its cost structure in alignment with business performance. It also continues to prioritize revenue-driving initiatives, margin amplification and financial security. While adverse foreign currency effects were more pronounced than initially anticipated and are expected to persist, Nu Skin reiterated its 2024 revenue and adjusted EPS guidance.

Nu Skin anticipates revenues in the band of $1.73-$1.87 billion for 2024, which suggests a 12-5% decline from the year-ago period’s reported figure. The company envisions unfavorable foreign currency impacts of 3-2% 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 77 cents-$1.16 per share compared with 17 cents delivered in 2023.

For the second quarter of 2024, Nu Skin expects revenues between $420 million and $455 million, including an unfavorable foreign currency impact of nearly 4% to 3%. The revenue projection suggests a decline of 16% to 9% from the year-ago quarter’s reported level. The company expects adjusted earnings of 10-20 cents a share. On a reported basis, NUS expects earnings between 1 and 10 cents per share for the second quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -52.7% due to these changes.

VGM Scores

At this time, Nu Skin has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, 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 #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Nu Skin is part of the Zacks Cosmetics industry. Over the past month, Helen of Troy (HELE), a stock from the same industry, has gained 0.9%. The company reported its results for the quarter ended February 2024 more than a month ago.

Helen of Troy reported revenues of $489.2 million in the last reported quarter, representing a year-over-year change of +1%. EPS of $2.45 for the same period compares with $2.01 a year ago.

For the current quarter, Helen of Troy is expected to post earnings of $1.59 per share, indicating a change of -18% from the year-ago quarter. The Zacks Consensus Estimate has changed +3.2% over the last 30 days.

Helen of Troy has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.

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