Zacks Investment Research upgraded
Nu Skin Enterprises Inc
) to a Zacks Rank #1 (Strong Buy) on Dec 2, as the company
projects double-digit year-over-year growth for earnings and
revenue for fiscal 2014. In fact, the company has been gaining
momentum ever since it reported strong third quarter 2013
Why the Upgrade?
Nu Skin's strong innovation program backed by its latest
ageLOC TR90 system led the company drive its fiscal 2014
guidance, which was announced on Nov 21. The company expects
earnings per share to grow 25%-30% on a year-over-year basis to
$7.25 - $7.50 for fiscal 2014. Revenues for fiscal 2014 are
expected in the range of $3.9 - $4.0 billion, up 22% - 25% from
the prior year, despite an anticipated unfavorable foreign
currency impact of 3%.
The company is very optimistic about its ageLOC TR90, a weight
management and body shaping system and the latest in the ageLOC
anti-aging product line, which is driving the company's profits.
Nu Skin's ageLOC anti-aging products focus on providing
nutritional and skin care solutions that target the sources of
Started in Sep 2013, the ageLOC TR90 weight management system
was well received in the Greater China and South Asia/Pacific
regions and generated approximately $205 million in limited-time
offer sales in the third quarter of 2013. The company expects
this momentum to continue through 2014.
Nu Skin also reported strong third quarter 2013 results on Oct
31. Earnings of $1.80 per share improved significantly from the
prior-year quarter, posting a 107% increase. Earnings also
surpassed the Zacks Consensus Estimate by 27%. The upswing in
earnings was driven by higher sales in the Greater China and
South Asia/Pacific regions, as well as in South Korea. Higher
margins and lower quarterly tax rate also led to earnings growth
in the quarter.
Despite a 3% unfavorable impact from currency, sales increased
76% to $927.6 million in the quarter. Sales were way ahead of the
Zacks Consensus Estimate of $815 million. The successful
execution of the ageLOC TR90 weight management system drove sales
in the quarter.
The company's gross margin during the quarter also shot up 140
basis points to 84.9%, primarily due to the TR90 launch in
Greater China and South Asia/Pacific. Operating margin improved
240 basis points to 18.1% in the third quarter as a result of
Following the strong third quarter results, Nu Skin raised its
2013 revenue guidance to the range of $3.18 - $3.21 billion, up
from its previous guidance of $2.83-$2.86 billion. The new
guidance includes a projected negative currency impact of 4% for
the year, lower than 5% expected previously. The company now
expects 2013 earnings to be $5.77 to $5.82 per share, up from
$4.85 to $5.00 per share expected previously.
Other Stocks to Consider
Other players in the consumer staples sector which look
attractive at current levels includes
Omega Protein Corp
Diamond Foods Inc
Pinnacle Foods Inc
). While Omega and Diamond Foods sport a Zacks Rank #1 (Strong
Buy), Pinnacle carries a Zacks Rank #2 (Buy).
DIAMOND FOODS (DMND): Free Stock Analysis
NU SKIN ENTERP (NUS): Free Stock Analysis
OMEGA PROTEIN (OME): Free Stock Analysis
PINNACLE FOODS (PF): Free Stock Analysis
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