Back to top

Analyst Blog

Zacks Equity Research

Nu Skin (NUS) Stock Falls Post Q3 Earnings on Cautious View

IPAR NUS CAG CHEF

Trades from $3

Shares of  Nu Skin Enterprises Inc. (NUS - Free Report) tumbled after the company provided a cautious fiscal outlook during its third quarter conference call. Nu Skin reported better-than-expected results in the third quarter of 2016.

Third Quarter Results in Detail

Nu Skin reported adjusted earnings of 89 cents per share in the third quarter of 2016, which gained a significant 25.4% from 71 cents per share in the year-ago quarter. The results exclude the 9 cents benefit from closing operations in Venezuela Earnings beat the Zacks Consensus Estimate of 82 cents and exceeded the company’s expectation range of 80 cents to 84 cents attributable to better-than-expected revenues.

Revenues of $604.2 million in the third quarter of 2016 gained about 6% from the year-ago quarter backed by double-digit gains in North Asia and Greater China. The company reported revenue growth in all the geographic regions except South Asia/Pacific. The company exceeded Zacks Consensus Estimate of $585 million as well as management’s guidance range of $560 million to $580 million.

Nu Skin preponed the launch of ageLOC Me in Korea from fourth of fiscal 2016 to third quarter fiscal 2016, which in turn benefited sales.

Revenues, excluding currency impact, gained 4% in the third quarter. Except South Asia/ Pacific, the company’s performance improved in Greater China, EMEA, Americas and North-Asia regions, on a constant currency basis.

 

NU SKIN ENTERP Price, Consensus and EPS Surprise

NU SKIN ENTERP Price, Consensus and EPS Surprise | NU SKIN ENTERP Quote

The company's gross and operating margin inflated in the third quarter due to higher sales. Gross margin inflated 530 basis points (bps) to 79.2%, while operating margin gained 620 bps to 13.6% in the third quarter of 2016. Although selling expenses increased the company was able to cut down general and administrative expenses during the quarter.

Nu Skin Enterprises experienced lower effective income tax rate for the quarter due to a tax benefit gained from closing operations in Venezuela. Tax rate lowered 1630 bps to 25.8%, compared to 42.1% in the previous year.

Other Financial Details

During the quarter, the company paid $19.9 million of dividends and repurchased $17.4 million worth of shares in the quarter, leaving the authorization at $405 million at the end of quarter.

Nu Skin ended the quarter with cash and cash equivalents of $516.99 million compared to $544.84 million in the prior year quarter. Long term debt was $356.29 million compared to $362.05 million a year ago.

Fourth Quarter Guidance

For the fourth quarter, revenues are expected in a range of $550 to $570 million including a negative currency impact of 0–2% with earnings in the range of 77–81 cents per share in the fourth quarter. The Zacks Consensus Estimate of 80 cents per share is in line with the guided range.

The company plans to focus its promotional activities during fourth quarter on driving consumer loyalty. It plans to execute ageLOC Me incentives in South Korea and South Asia. In the Americas it plans to launch ageLOC Me, and in Japan and South Korea it plans to launch ageLOC Youth.

Full-Year Sales Guidance Raised

For 2016, the company has raised its earnings and revenue guidance owing to better-than-expected third quarter results . The company now expects revenue in a range of $2.23 to $2.25 billion, including a negative foreign currency impact of 2%. The company had previously forecast revenues in a range of $2.16 to $2.20 billion, with currency impact of 4–5%. Adjusted earnings are forecast in a range of $2.96 to $3.00. The Zacks Consensus Estimate is pegged at $2.87 per share is below the guided range.

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

Other Picks in the Sector

Some better ranked stocks in the broader consumer staples sector worth considering includes Inter Parfums Inc. (IPAR - Free Report) , ConAgra Foods Inc. (CAG - Free Report) and The Chef’s Warehouse Inc. (CHEF - Free Report) all carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Inter Parfums Inc. has an expected earnings growth of 15%. Con Agra Foods has an expected earnings growth rate of 8.82% and Chef’s Warehouse has a long term growth rate of 12.5%.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>


In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

INTER PARFUMS (IPAR) - free report >>

NU SKIN ENTERP (NUS) - free report >>

CONAGRA BRANDS (CAG) - free report >>

CHEFS WAREHOUSE (CHEF) - free report >>