| Stock (Symbol) | Stock Price | |
Nu Skin (NUS) |
$48 |
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| Data is as of | Expected to Report | Sector |
August 22, 2014 |
Oct 20 – Oct 24 |
Food & Necessities |
| Sharek’s Take | ||
 Nu Skin has been having troubles with the Chinese government this year. NUS was accused and investigated for illegal sales practices (i.e. haveing a pyramid scheme with its sales staff). In the end, the company suspended operations for a number of months and got fined a half-a-million dollars. Now Nu Skin is operating in China again, but business didn’t bounce back as it should have as NUS just delivered a very poor qtr that missed estimates, and the results sent the stock down to a new 52-week low. Afterwards, company management issued guidance that was well below street estimates (but to be fair, management wasn’t giving guidance during the inquiry). Now that all seems lost, this is normally when I throw in the towel, sell the stock, and “call the bottom” before the stock rises again. Well, I’m going to wait it out. Nu Skin’s business is only hurting in China, the rest of the world came had good results last qtr. Less than a year ago this company was clicking on all cylinders — NUS stock was truly admired — and I feel once business in China comes up to speed the stock will soar once more. |
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| One-Year Chart | ||
 Instead of the stock chart and profits (both look sick) I wish to focus on the Annual Profit history on the right side of this chart. Profits went from $3.50 to $6 in 2013. Had the company not had China issues it could have made $7 to $8 this year. A 12 to 14 P/E would make this a $100 stock. |
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| Earnings Table | ||
 Nu Skin’s sales fell 5% last qtr, the first negative quarter I can remember. Profits fell 7%. Sales are expected to fall 32% and 37% the next 2 qtrs, then rise the 1st qtr of 2015.The company missed estimates by 17 cents, and these numbers had also been slashed prior to that. 2014 profit estimates got slashed from $6 to $4, but I think comparisons in 2015 will be easy. Profit growth looks horrible the next 2 qtrs, and things should pick up in 2015. |
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| Fair Value | ||
 Although NUS has been a fast grower since 2009, it usually doesn’t get a high P/E due to its pyramid style compensation structure. 12 times earnings is reasonable for this stock, but the P/E jumped in 2013 when it sold for more than 20x earnings at times. I think NUS has the ability to rebound in a big way. |
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| Ten-Year Chart | ||
 2006-2008 were bad years for NUS, but the company came out with new, successful products that caused a jolt in profits. From the look of this chart, it seems NUS should be $75. A lot of the future growth will depend on the company’s ability to discover new (profitable) skincare treatments. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
24 of 24 |
Nu Skin is looking really bad right now, but indications are China has turned the corner already and business is getting better. I think this stock has tremendous upside in 2015 as better news combined with profit growth (from easy 2014 comparisons) should be the remedy this stock needs. NUS is ranked at the bottom of the 24 stock in the Growth Portfolio Power Rankings, but a little rebound will go a long way for this stock. NUS is not a good fit for the Aggressive Growth Portfolio. |
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Aggressive Growth Portfolio
N/A |
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