Last week, Nu Skin (NUS) upped next quarter’s and 2013’s estimates in a big-league way. NUS popped on the news, jumping from $66 to $79 on the day. Now this is clearly a top stock to own, if you’re already in. Let’s see what the stock looks like now and if this is still a good time to invest.
One Year Chart
The data in these charts and tables is as of May 6th, when NUS was $59 a share.
The big change in this chart (besides the fact NUS is $79 not $59) is 2013 estimates of $4.29 shown here have now been upped by management to $4.85 – $5.00. The company made $3.52 last year, so if we assume NUS will make $5, profit growth will rise around 50% this year — this is clearly a top-stock.
NxtQtr’s estimate also increased from $0.96 vs. $0.94 (a year ago) = +2%% to $1.20 vs. $0.94 = +27%. So next quarter increased by 24 cents, but 2013 esimates increased around 70 cents total. This means more good news for the next three quarters.
Fair Value
In this Fair Value table I put a 15 P/E on NUS and obviously that’s too low (and this estimate of $4.29 is way off). Today the $79 quote means NUS is selling for 16 times earnings.
On a historical basis, the stock had a P/E of between 21 and 35 during the years 2004 through 2007. During 2008-2011 the stock had annual median P/Es between 13 and 15. Nu Skin often gets a lower P/E because the company pays its employees similar to a pyramid scheme. Right now the stock is hot because profits are hot, and fast money investors have accumulated shares (greed over fear).
If we put a 20 P/E on next year’s new estimate of $5.61 we get a $112 price target, 42% higher than today. This seems realistic given the momentum the stock and profit estimates have. If the stock just gets a 15 P/E then we are looking at an $85 stock, less than 10% upside from the current $79 price.
Sharek’s Take
Nu Skin clearly deserves to be a hot stock, and I feel it still has upside even after the move from $59 to $79. Investors who are short term can buy in now as a momentum play, but I would rather wait for a better entry point. NUS is at the top of my radar.
View the Earnings Table here.View the Ten Year Chart here.
