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Nu Skin (NUS) Down 15.3% Since Last Earnings Report: Can It Rebound?

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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 15.3% 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 Beat Estimates, Revenues Down

Nu Skin delivered fourth-quarter 2021 results, with the top and the bottom line beating the Zacks Consensus Estimate. However, revenues and earnings declined year over year.

Nu Skin highlighted that many of its Asian markets like Mainland China continue to face strict lockdowns as well as restrictions on in-person sales events and promotional activities. The South Korea region is benefiting from the adoption of social commerce. Further, the company is optimistic about its Nu Vision 2025 strategy. It is based around key strategic imperatives like EmpowerMe personalized beauty and wellness strategy with connected beauty devices, affiliate-powered social commerce business model and the expansion of the digital platform.

Q4 Highlights

Nu Skin reported quarterly earnings of $1.11 per share, down from $1.40 per share reported in the year-ago quarter. The metric beat the Zacks Consensus Estimate of 95 cents per share. Management highlighted that the bottom line benefited from gross margin and operational improvements.

Revenues of $673.4 million fell 10% year over year on a reported basis. Revenues included a negative impact of 2% from foreign currency fluctuations. On a cc basis, revenues declined 8%. The top line surpassed the Zacks Consensus Estimate of $655.7 million. Management highlighted that it witnessed solid demand for the two most recent products — Beauty Focus Collagen+ and ageLOC Meta. Sales leaders were down 13% year over year to 61,515. Nu Skin’s customer base dropped 12% to 1,367,559.

Gross profit of $499.7 million declined from $553.4 million reported in the year-ago quarter. The gross margin expanded year over year from 74% to 74.2%. Nu Skin business’ gross margin expanded to 77.9% from 76.5%.

Selling expenses declined from $284.1 million in the prior-year quarter to $260.8 million. As a percentage of sales, the metric came in at 38.7%, up from 38% reported in the year-ago quarter. Nu Skin business’ selling expenses were 41% of sales, up from 40.3% in the year-ago quarter.

General and administrative expenses of $166.6 million declined from $180.6 million in the year-ago quarter. As a percentage of sales, general and administrative expenses expanded from 24.1% to 24.7%.

Operating income of $20.3 million declined from $88.7 million in the year-ago quarter. Further, the operating margin was 3%, down from 11.9% reported in the year-ago quarter.

Segmental Results

Segment-wise, revenues (at cc) declined 26% in Mainland China, 8% in Southeast Asia/Pacific, 14% in EMEA and 6% in Japan. The same increased 4% in the Americas, 8% in South Korea and 3% in Hong Kong/Taiwan. Total Nu Skin revenues of $635.8 million fell 8% at cc from the prior-year quarter’s figure of $704.3 million.

The company benefited from 69% revenue growth in the Grow Tech business at cc. Revenues in the Manufacturing business declined 16% at cc.

Other Financial Details

Nu Skin ended the quarter with cash and cash equivalents of $339.6 million, long-term debt of $268.8 million and total stockholders' equity of $912.8 million.

During the reported quarter, the company paid out dividends of $18.9 million and repurchased $10 million worth of shares. With this, it currently has $245.4 million remaining under the current share repurchase authorization. In a separate press release, Nu Skin announced a dividend hike. The company will now pay 38.5 cents per share, up from 38 cents paid earlier. The hiked dividend will be paid out on Mar 9, 2022, to shareholders of record as of Feb 28.

Guidance

The company anticipates 2022 revenues in the range of $2.66-$2.77 billion, calling for a 1% decline to 3% growth from the year-ago period’s reported figure. The company envisions an unfavorable currency impact of 1-2% on 2022 revenues. Management expects 2022 EPS in the range of $4.05-$4.45, indicating an increase of 42-56% on a reported basis. The metric is expected to fall 2-8% growth on an adjusted basis.

For first-quarter 2022, the company projects revenues of $590-$560 million that include unfavorable currency impacts of 2-3%. The projection suggests a decline of 13-17% from the year-ago quarter’s level. The company’s quarterly EPS is anticipated between 75 and 65 cents, indicating an 18-28% slump from the year-ago quarter’s levels.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -14% due to these changes.

VGM Scores

At this time, Nu Skin has a nice Growth Score of B, a grade with the same score on the momentum front. 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 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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