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Nu Skin (NUS) Down 12.5% 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 12.5% 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 catalysts.
Nu Skin Q1 Earnings & Revenues Top Estimates, Dip Y/Y
Nu Skin Enterprises, Inc. posted first-quarter 2023 results, wherein the top and bottom lines declined year over year but came ahead of the respective Zacks Consensus Estimate. The company faced difficult year-over-year comparisons and continued macroeconomic hurdles.
Results in the Americas and Southeast Asia were hurt by macroeconomic factors like inflation and recession-related concerns, whereas better-than-expected outcomes in South Korea and Mainland China were upsides. That said, the company has been on track with its Nu Vision 2025 strategy.
During the quarter, Nu Skin introduced ageLOC TRMe, which is its personalized weight management system in South Korea. Apart from this, its ageLOC LumiSpa iO device has been performing well. Enhancements to its Vera and Stela apps have also been working well.
Management remains encouraged about the second half of 2023, wherein it plans to launch ageLOC WellSpa iO – its next connected device system. It also plans to continue developing its social commerce business model to enhance connections with consumers and affiliates.
Q1 Highlights
Nu Skin’s adjusted earnings of 37 cents a share declined from the 76 cents reported in the year-ago quarter. However, the metric surpassed the Zacks Consensus Estimate of 33 cents.
Revenues of $481.5 million tumbled roughly 20% year over year. Revenues included a negative impact of 4% from foreign currency fluctuations. Nonetheless, the top line beat the Zacks Consensus Estimate of $477 million.
Sales leaders were down 17% year over year to 43,755. Nu Skin’s customer base dropped 18% to 1,083,536. The company’s paid affiliates were down 12% to 221,354.
The gross profit of $347.9 million declined from the $443.4 million reported in the year-ago quarter. The gross margin came in at 72.3%, down from the 73.3% reported in the year-ago quarter. The downside was due to global inflationary pressures. Nu Skin business’ gross margin came in at 76.4%, down 10 basis points year over year.
Selling expenses declined to $188.1 million from the $242.7 million reported in the prior-year quarter. As a percentage of revenues, the metric was 39.1%, down from the 40.1% reported in the year-ago quarter. Nu Skin business’ selling expenses were 41.7% compared with 43% in the prior-year quarter.
General and administrative expenses of $133.9 million declined from $148.6 million in the year-ago quarter. As a percentage of revenues, general and administrative expenses came to 27.8%, up from 24.6% in the year-ago period.
The adjusted operating income of $28.9 million declined from $52.1 million in the year-ago quarter. The adjusted operating margin contracted to 5.4% from 8.6% reported in the year-ago quarter.
Regional Results
Region-wise, revenues (at cc) declined 15%, 41%, 21%, 3%, 6% and 5% in the Americas, Mainland China, Southeast Asia/Pacific, Japan, the EMEA and Hong Kong/Taiwan, respectively. In South Korea, revenues rose 3% at cc. Total Nu Skin revenues fell 17% at cc from the prior-year quarter.
Other Financial Details
Nu Skin ended the quarter with cash and cash equivalents of $229.9 million, long-term debt of $372.6 million and total stockholders' equity of around $893 million.
In the reported quarter, the company paid out dividends of $19.4 million while making no repurchases. It currently has $175.4 million remaining under the current share repurchase authorization. In a separate press release, management announced a dividend of 39 cents per share. The dividend is payable on Jun 7, 2023, to shareholders on record as of May 26.
Guidance
Management expects to witness gradual sequential improvements in 2023, even amid a tough global macro landscape. The company remains focused on managing its cost structure and making investments in core initiatives supporting its Nu Vision 2025 strategy. The company raised its adjusted earnings per share (EPS) guidance for 2023 while keeping the revenue projection unchanged.
Nu Skin anticipates revenues in the band of $2.03-$2.18 billion for 2023, suggesting a 9-2% decline from the year-ago period’s reported figure. The company envisions an unfavorable foreign currency impact of 1-2% on 2023 revenues.
Management now envisions the adjusted EPS in the band of $2.41-$2.81 compared with the $2.35-$2.75 expected earlier. The projection suggests a decline from adjusted earnings of $2.90 reported last year. The reported EPS is still anticipated in the range of $2.27-$2.67 compared with the year-ago period’s figure of $2.07.
For the second quarter, Nu Skin expects revenues between $485 million and $525 million, including an unfavorable foreign currency impact of 1-2%. The current revenue projection suggests a 14-6% decline from the year-ago quarter’s reported level. The company expects earnings in the band of 45-55 cents a share for the second quarter.
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 -20.99% due to these changes.
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 C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 12.5% 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 12.5% 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 catalysts.
Nu Skin Q1 Earnings & Revenues Top Estimates, Dip Y/Y
Nu Skin Enterprises, Inc. posted first-quarter 2023 results, wherein the top and bottom lines declined year over year but came ahead of the respective Zacks Consensus Estimate. The company faced difficult year-over-year comparisons and continued macroeconomic hurdles.
Results in the Americas and Southeast Asia were hurt by macroeconomic factors like inflation and recession-related concerns, whereas better-than-expected outcomes in South Korea and Mainland China were upsides. That said, the company has been on track with its Nu Vision 2025 strategy.
During the quarter, Nu Skin introduced ageLOC TRMe, which is its personalized weight management system in South Korea. Apart from this, its ageLOC LumiSpa iO device has been performing well. Enhancements to its Vera and Stela apps have also been working well.
Management remains encouraged about the second half of 2023, wherein it plans to launch ageLOC WellSpa iO – its next connected device system. It also plans to continue developing its social commerce business model to enhance connections with consumers and affiliates.
Q1 Highlights
Nu Skin’s adjusted earnings of 37 cents a share declined from the 76 cents reported in the year-ago quarter. However, the metric surpassed the Zacks Consensus Estimate of 33 cents.
Revenues of $481.5 million tumbled roughly 20% year over year. Revenues included a negative impact of 4% from foreign currency fluctuations. Nonetheless, the top line beat the Zacks Consensus Estimate of $477 million.
Sales leaders were down 17% year over year to 43,755. Nu Skin’s customer base dropped 18% to 1,083,536. The company’s paid affiliates were down 12% to 221,354.
The gross profit of $347.9 million declined from the $443.4 million reported in the year-ago quarter. The gross margin came in at 72.3%, down from the 73.3% reported in the year-ago quarter. The downside was due to global inflationary pressures. Nu Skin business’ gross margin came in at 76.4%, down 10 basis points year over year.
Selling expenses declined to $188.1 million from the $242.7 million reported in the prior-year quarter. As a percentage of revenues, the metric was 39.1%, down from the 40.1% reported in the year-ago quarter. Nu Skin business’ selling expenses were 41.7% compared with 43% in the prior-year quarter.
General and administrative expenses of $133.9 million declined from $148.6 million in the year-ago quarter. As a percentage of revenues, general and administrative expenses came to 27.8%, up from 24.6% in the year-ago period.
The adjusted operating income of $28.9 million declined from $52.1 million in the year-ago quarter. The adjusted operating margin contracted to 5.4% from 8.6% reported in the year-ago quarter.
Regional Results
Region-wise, revenues (at cc) declined 15%, 41%, 21%, 3%, 6% and 5% in the Americas, Mainland China, Southeast Asia/Pacific, Japan, the EMEA and Hong Kong/Taiwan, respectively. In South Korea, revenues rose 3% at cc. Total Nu Skin revenues fell 17% at cc from the prior-year quarter.
Other Financial Details
Nu Skin ended the quarter with cash and cash equivalents of $229.9 million, long-term debt of $372.6 million and total stockholders' equity of around $893 million.
In the reported quarter, the company paid out dividends of $19.4 million while making no repurchases. It currently has $175.4 million remaining under the current share repurchase authorization. In a separate press release, management announced a dividend of 39 cents per share. The dividend is payable on Jun 7, 2023, to shareholders on record as of May 26.
Guidance
Management expects to witness gradual sequential improvements in 2023, even amid a tough global macro landscape. The company remains focused on managing its cost structure and making investments in core initiatives supporting its Nu Vision 2025 strategy. The company raised its adjusted earnings per share (EPS) guidance for 2023 while keeping the revenue projection unchanged.
Nu Skin anticipates revenues in the band of $2.03-$2.18 billion for 2023, suggesting a 9-2% decline from the year-ago period’s reported figure. The company envisions an unfavorable foreign currency impact of 1-2% on 2023 revenues.
Management now envisions the adjusted EPS in the band of $2.41-$2.81 compared with the $2.35-$2.75 expected earlier. The projection suggests a decline from adjusted earnings of $2.90 reported last year. The reported EPS is still anticipated in the range of $2.27-$2.67 compared with the year-ago period’s figure of $2.07.
For the second quarter, Nu Skin expects revenues between $485 million and $525 million, including an unfavorable foreign currency impact of 1-2%. The current revenue projection suggests a 14-6% decline from the year-ago quarter’s reported level. The company expects earnings in the band of 45-55 cents a share for the second quarter.
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 -20.99% due to these changes.
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 C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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.