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Nu Skin Raises $210M from Chinese Investors; Shares Up

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Shares of Nu Skin Enterprises Inc. (NUS - Free Report) rose 4.45% in after-market trading on Jun 15 after the retailer agreed to take a $210 million investment from a Chinese consortium of investors, in order to accelerate growth in China.

The consortium is led by Ping An Securities Ltd., which is owned by Ping An of China Securities (Hong Kong) Company Ltd. and a group of additional investors affiliated with ZQ Capital Limited.

Under the terms of the investment, Ping An ZQ China Growth Limited is purchasing $210 million in aggregate principal amount of 4.75%, four-year convertible senior notes. Nu Skin expects to complete the sale of the notes within five business days, subject to customary closing conditions.

NU SKIN ENTERP Price and Consensus

NU SKIN ENTERP Price and Consensus | NU SKIN ENTERP Quote

Nu Skin plans to utilize the proceeds for repurchasing shares throughout the remainder of the year and invest in its China operations. As a result, this investment will be accretive for Nu Skin shareholders. The company will also benefit from investors’ in depth knowledge of the market and their expertise, which will help the company to grow over the long term.

As a result, the company now anticipates second quarter revenues to be at the high end of the previous guidance of $560 to $580 million, announced during the first quarter conference call. Also during the first quarter call, the company stated that it expects revenues to increase in a range of 6% to 8% on a constant currency basis, with earnings in the range of 75 – 79 cents per share in the second quarter. The Zacks Consensus Estimate of 81 cents per share is above the guided range. The company anticipates second quarter and 2016 gross margin to normalize and be above 78%.

Nu Skin, a direct-sales beauty products and dietary supplements company, reported better-than-expected results in the first quarter of 2016. However, the results were significantly lower than the prior year due to margin declines. This skin care and nutritional products retailer raised its outlook for 2016 owing to new product launches and a favorable view on currency.

Nu Skin currently has a Zacks Rank #3 (Hold).

Stocks to Consider

A better-ranked stock in the same space is Estee Lauder Companies, Inc. (EL - Free Report) , with a Zacks Rank #2 (Buy). Stocks worth considering in the broader consumer staples sector include B&G Foods, Inc. (BGS - Free Report) and Post Holdings, Inc. (POST - Free Report) , both sporting a Zacks Rank #1 (Strong Buy).

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