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Nu Skin (NUS) to Report Q3 Earnings: What's in the Cards?

Nu-Skin Enterprises, Inc.NUS is set to report third-quarter 2016 results on Nov 3, after the market closes . Last quarter, the company posted in-line results.

Let us see how things are shaping up for this announcement.

Factors to Consider

Unfavorable currency has been a concern for Nu Skin's revenues since quite some time. For the third quarter, revenues are expected in a range of $560−$580 million, assuming a negative foreign currency impact of approximately 1−2%. Earnings are expected in the range of 80-84 cents per share in the quarter. The Zacks Consensus Estimate of 82 cents per share is within the guided range.

However, we note that China has always been suspicious about direct selling companies like Nu Skin and Herbalife Ltd. HLF . Both these companies employ representatives to sell products and are always closely watched by rivals and regulators. They face accusations like focusing more on recruiting rather than product sales and running a pyramid business model, i.e. employing deceptive marketing practices for business improvement.

Nevertheless, we believe that product innovation has been driving the company's revenues since the past many quarters. In the second quarter, revenues were driven by significant product launch events in South Asia/Pacific and Greater China. The company also witnessed an increase in sales leaders during the quarter, reflecting the impact of product launches.

In April, the company introduced its ageLOC Youth nutritional product in South Asia Pacific, which drove the region's revenue growth by 42%, on a constant currency basis, in the second quarter. In the remainder of 2016, the company intends to focus on the full-time launch of ageLOC Me and its global product initiatives.

NU SKIN ENTERP Price, Consensus and EPS Surprise

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

Earnings Whispers

Our proven model does not conclusively show that Nu Skin is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Earnings ESP for Nu Skin is -1.22% as the Most Accurate estimate of 81 cents is lower than the Zacks Consensus Estimate of 82 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Nu Skin has a Zacks Rank #3, which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies in the consumer staples sector, which are worth considering, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Avon Products, Inc. AVP with an Earnings ESP of +33.33% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Sanderson Farms, Inc. SAFM with an Earnings ESP of +1.52% and a Zacks Rank #1.

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AVON PRODS INC (AVP): Free Stock Analysis Report

NU SKIN ENTERP (NUS): Free Stock Analysis Report

SANDERSON FARMS (SAFM): Free Stock Analysis Report

HERBALIFE LTD (HLF): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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