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Why Is Nu Skin (NUS) Down 8.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Nu Skin Enterprises (NUS - Free Report) . Shares have lost about 8.2% 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 the most recent earnings report in order to get a better handle on the important drivers.
Nu Skin Q2 Earnings Beat Estimates, Sales Grow Y/Y
Nu Skin delivered impressive second-quarter 2021 results, with the top and the bottom line beating the Zacks Consensus Estimate as well as increasing year over year. Management raised 2021 earnings view.
Q2 Highlights
Nu Skin reported quarterly earnings of $1.15 a share, which beat the Zacks Consensus Estimate of $1.06 per share. The metric surged 42% from 81 cents reported in the year-ago quarter. The upside can be attributed to solid gross margin and operating margin. Effective cost-control measures and supply chain efficiency are also driving growth.
Revenues of $704.1 million rallied 15% year over year on a reported basis. The top line surpassed the Zacks Consensus Estimate of $702.6 million. Revenues included a positive impact of 6% from foreign-currency fluctuations. On a cc basis, revenues increased 9%. The upside can be attributed to increase in sales leaders. Sales leaders were up 15% year over year to 64,228 on the back of new product introductions and better leader qualification programs. Nu Skin’s customer base dropped 2% to 1,467,617. The company highlighted that the downside was caused by massive surge in the year-ago quarter.
Gross profit of $532.1 million increased from $458.3 million reported in the year-ago quarter. Gross margin expanded year over year from 74.8% to 75.6% on the back of favorable product mix, product cost focus as well as supply chain efficiencies. Further, Nu Skin business’ gross margin expanded to 78.3% from 77.6% reported in the prior-year quarter.
Selling expenses increased from $248.6 million in the prior-year quarter to $277.9 million. As a percentage of sales, the metric came in at 39.5% compared with 40.6% reported in the year-ago quarter. Nu Skin business’ selling expenses were 42.4% of sales, down from 43.3% in the year-ago quarter. General and administrative expenses of $168.8 million increased from $151.6 million in the year-ago quarter. As a percentage of sales, general and administrative expenses contracted from 24.7% to 24%. Effective expenses management and gains from leverage of revenue growth contributed to the upside.
Operating income of $85.4 million increased from $58.1 million in the year-ago quarter. Further, operating margin was 12.1%, up from 9.5% reported in the year-ago quarter. The company is on track to achieve its operating margin goal of 13%.
Segmental Results
Segment-wise, revenues (at cc) improved 14% in Americas/Pacific, 6% in South Korea, 49% in EMEA, 2% in Southeast Asia and 1% in Japan. However, the same declined 4% in Mainland China at cc. Revenues were flat in Hong Kong/Taiwan at cc. Total Nu Skin revenues of $655.7 million increased 8% at cc from the prior-year quarter’s figure of $574.2 million. The company benefited from an impressive 27% revenue growth in the manufacturing division at cc. Revenues in the Grow Tech business declined 38% at cc.
Other Financial Details
Nu Skin ended the quarter with cash and cash equivalents of $354.8 million, long-term debt of $288.3 million and total stockholders' equity of $917.8 million. During the reported quarter, the company paid out dividends of $19 million and repurchased $10 million worth of shares. With this, it currently has $265.4 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 Sep 8, 2021 to shareholders of record as of Aug 27.
Guidance
Owing to ongoing efficiencies in the business, the company is revising its 2021 EPS guidance upward. Management now expects EPS in the range of $4.30-$4.50, indicating an increase of 18-24%. Earlier, the company had projected EPS within $4.05-$4.30, indicating an increase of 12-18%. During 2021, revenues are anticipated in the range of $2.81-$2.87 billion, which calls for an increase of 9-11% year over year. It anticipates favorable currency impact of 3-4% on revenues.
For the third quarter of 2021, the company projects revenues of $700-$730 million that includes favorable currency impacts of 2-3%. The projection suggests flat to 4% growth from the year-ago quarter’s level. Quarterly EPS is anticipated between $1.10 and $1.20, indicating 2-11% growth from the year-ago quarter’s levels.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Nu Skin has a poor Growth Score of F, 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 quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been 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.
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Why Is Nu Skin (NUS) Down 8.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Nu Skin Enterprises (NUS - Free Report) . Shares have lost about 8.2% 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 the most recent earnings report in order to get a better handle on the important drivers.
Nu Skin Q2 Earnings Beat Estimates, Sales Grow Y/Y
Nu Skin delivered impressive second-quarter 2021 results, with the top and the bottom line beating the Zacks Consensus Estimate as well as increasing year over year. Management raised 2021 earnings view.
Q2 Highlights
Nu Skin reported quarterly earnings of $1.15 a share, which beat the Zacks Consensus Estimate of $1.06 per share. The metric surged 42% from 81 cents reported in the year-ago quarter. The upside can be attributed to solid gross margin and operating margin. Effective cost-control measures and supply chain efficiency are also driving growth.
Revenues of $704.1 million rallied 15% year over year on a reported basis. The top line surpassed the Zacks Consensus Estimate of $702.6 million. Revenues included a positive impact of 6% from foreign-currency fluctuations. On a cc basis, revenues increased 9%. The upside can be attributed to increase in sales leaders. Sales leaders were up 15% year over year to 64,228 on the back of new product introductions and better leader qualification programs. Nu Skin’s customer base dropped 2% to 1,467,617. The company highlighted that the downside was caused by massive surge in the year-ago quarter.
Gross profit of $532.1 million increased from $458.3 million reported in the year-ago quarter. Gross margin expanded year over year from 74.8% to 75.6% on the back of favorable product mix, product cost focus as well as supply chain efficiencies. Further, Nu Skin business’ gross margin expanded to 78.3% from 77.6% reported in the prior-year quarter.
Selling expenses increased from $248.6 million in the prior-year quarter to $277.9 million. As a percentage of sales, the metric came in at 39.5% compared with 40.6% reported in the year-ago quarter. Nu Skin business’ selling expenses were 42.4% of sales, down from 43.3% in the year-ago quarter. General and administrative expenses of $168.8 million increased from $151.6 million in the year-ago quarter. As a percentage of sales, general and administrative expenses contracted from 24.7% to 24%. Effective expenses management and gains from leverage of revenue growth contributed to the upside.
Operating income of $85.4 million increased from $58.1 million in the year-ago quarter. Further, operating margin was 12.1%, up from 9.5% reported in the year-ago quarter. The company is on track to achieve its operating margin goal of 13%.
Segmental Results
Segment-wise, revenues (at cc) improved 14% in Americas/Pacific, 6% in South Korea, 49% in EMEA, 2% in Southeast Asia and 1% in Japan. However, the same declined 4% in Mainland China at cc. Revenues were flat in Hong Kong/Taiwan at cc. Total Nu Skin revenues of $655.7 million increased 8% at cc from the prior-year quarter’s figure of $574.2 million. The company benefited from an impressive 27% revenue growth in the manufacturing division at cc. Revenues in the Grow Tech business declined 38% at cc.
Other Financial Details
Nu Skin ended the quarter with cash and cash equivalents of $354.8 million, long-term debt of $288.3 million and total stockholders' equity of $917.8 million. During the reported quarter, the company paid out dividends of $19 million and repurchased $10 million worth of shares. With this, it currently has $265.4 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 Sep 8, 2021 to shareholders of record as of Aug 27.
Guidance
Owing to ongoing efficiencies in the business, the company is revising its 2021 EPS guidance upward. Management now expects EPS in the range of $4.30-$4.50, indicating an increase of 18-24%. Earlier, the company had projected EPS within $4.05-$4.30, indicating an increase of 12-18%. During 2021, revenues are anticipated in the range of $2.81-$2.87 billion, which calls for an increase of 9-11% year over year. It anticipates favorable currency impact of 3-4% on revenues.
For the third quarter of 2021, the company projects revenues of $700-$730 million that includes favorable currency impacts of 2-3%. The projection suggests flat to 4% growth from the year-ago quarter’s level. Quarterly EPS is anticipated between $1.10 and $1.20, indicating 2-11% growth from the year-ago quarter’s levels.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Nu Skin has a poor Growth Score of F, 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 quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been 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.