Nu Skin: Rapid Aging of World Population Portends Strong Future Growth 22 comments
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Nu Skin Enterprises Inc. (NUS) is sitting on a demographic sweet spot that should guarantee significant expansion of its revenue stream for years to come, based on the significant aging of the world population and what seems to be an ever-increasing global focus on “retaining one’s youth.” The 25-year-old company primarily develops and produces a line of skin-care products and nutritional supplements which it offers in 48 worldwide markets through a 750,000 strong direct sales force and in China through 45 retail stores.
The company’s stated goal, as of 2008, was to become the “world’s leading anti-aging company by addressing the sources of aging, not just the signs and symptoms.” With that in mind, the company is currently releasing a new line of “ageLOC” products that are designed to reduce the number of facial skin free radicals. According to a Nu Skin sponsored study conducted by Stanford University, ageLOC serums and creams reduced the appearance of fine lines, wrinkles, crows feet and other signs of aging in a study group of 55-year-olds, making them appear seven years younger.
This study’s results, along with the popularity of their existing line of products with the 50-year-old and older population, bodes well for the company as the number of people age 50 and older will dramatically increase in the coming years, especially in some of the key markets in which Nu Skin has built a strong presence.
According to the United Nation’s Population Division, the growth rate of the world’s older (60-plus) population is already significantly higher than that of the total population growth rate (1.9 percent versus 1.2 percent, respectively), but by as early as the year 2025 the growth rate of those over 60 will be 3.5 times that of the rate of total population growth. Or, put another way, the global population of those over 60 is expected to more than double and surpass 1 billion by 2030, and reach nearly 2 billion by 2050.
Source: United Nation's Population Division
This represents a hefty increase in the number of potential customers passing through Nu Skin’s core demographic base, an increase that is already well into acceleration mode. According to Nu Skin, the anti-aging industry is expected to grow 76 percent in the U.S., 73 percent in Japan and 82 percent in the Asia Pacific region within the next five years.
Despite the worldwide recession and declines in discretionary spending, the company appears to be on track to earn record revenues in 2009, and should easily top 2008 revenues of more than $1.25 billion. In 2008 the company saw 24 percent year-over-year growth in its “Skincare” products, 180 percent growth in its “Galvanic Spa” facial care products, 70 percent growth in its “Tru Face Essence” products, but recorded a 4 percent decrease in its “Pharmanex” line of nutritional products. Since 2001 the company has achieved a 5 percent compound annual growth rate (CAGR) in total revenues, 10 percent CAGR in Korean sales, 15 percent CAGR in U.S. sales, and a 25 percent CAGR in European sales. In its most recent earnings announcement in late July the company’s second-quarter profit rose 7 percent year-over-year, beating analyst expectations, and the company increased its guidance for expected third-quarter and full year earnings.
The company attributes some of its success to its emphasis on direct sales, and considers direct selling a “hedge against consumer spending contractions” during tough economic times. According to the Direct Selling Association, during the 2001-2002 recession direct sales were up $2 billion in 2002 from the prior year, “far outpacing the average increase between 1990 and 2006 of $1.2 billion.” Nu Skin also credits its sales force for robust results, noting that they are paid the “highest percentage of revenue in distributor commissions of all direct selling companies listed on the New York Stock Exchange.”
With a current share price of about $18, a trailing 12-month price to earnings ratio of 17.63, and a price to sales ratio of 0.91, the company seems to be more attractive than its biggest rival, Avon Products Inc. (AVP), with a current sales price of about $32.50, and a P/E of 21.20 and P/S of 1.35. We believe Nu Skin is undervalued given its growth prospects and that its current discount to Avon (see table below) is unwarranted.
| Company | $ | P/S | P/B | P/D | Yld. | P/E 12-2010 | P/E 12-2011 | |
| Nu Skin | $18.02 | 0.9 | 3.7 | 0.5 | 2.5 | 14.1 | 12.7 | |
| Avon | $32.38 | 1.4 | 16.3 | 3.1 | 2.6 | 19.6 | 15.4 |
Disclosure: No Positions, but Nu Skin is Featured in Our Model Portfolio.
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This article has 22 comments:
Too much competition from similar, less expensive products.
Evidently you have no clue about what you are talking about. No clue on antiaging products. No clue on network marketing. Reserve your comments to yourself. please. You are causing unnecessary damage to millions of honest, hardworking participants in this extraordinary business model. Oh, by the way, have you heard that scientists have already proven that the earth is indeed round? You may still be one of the holdouts who still think the earth is flat.
James Espiritu
On Sep 23 02:50 PM pftittl wrote:
> Pyramid operation. Amway 2.
>
> Too much competition from similar, less expensive products.
So now, pftittl, I invite you to show your stuff. Again, you are not a clueless yutz, so you obviously made that statement coming from a position of knowledge and research.
So, please pftittl, tell us all.
Tell us what you found out, that the Better Business Bureau missed, when they examined this company, and gave it a rating of A+ (the highest they give.)
Tell us what you found out, that the people of Dun and Bradstreet missed, when they gave this company a rating of 5A1 (The highest they give.)
Tell us what you found out, that Forbes Magazine missed, when they, now three times in this calendar year, gave this company a favorable write-up, including referring to them relying on "sales, not gimmicks".
Pftittl, you are truly to be commended. Do you realize that what you found out, was missed by fifty...thats FIFTY governments, when they welcomed this company in to their countries, and allowed them to do business. Wow!!! You are amazing!! This company really pulled the wool over the eyes oF FIFTY versions of the FDA, FTC, IRS, and other regulators.....But...n... couldn't fool the razor-sharp analytical brain that you are blessed with.
Wait a minute....NBC---The Today show did a favorable blurb. You'd better, right now, get their producers on the phone, and tell them what you found out that they didn't.
OOPS---This company was just recognized in seven categories at the International Business Awards in new York City, including one for having the most innovative company doing business in Asia. You'd better get on the phone with those award people and tell them immediately what you know, that they missed!!!!!
Now, after you do that, you have some more international phone calls to make. You'd better call the parents of the recipients of thE 164 million--repeat 164 million-repeat so even you can understand it,---164 MILLION MEALS donated by this company and it's distributors to starving and severely malnourished children around the world. When you tell their parents about what you know about this company that they missed, as they watched their children go to sleep with full stomachs for the first time in months, I'm sure they'll be most appreciative.
Please tell us what your research has found about Nu Skin, that all the abovementioned entities have missed.
After all, you are, having researched those facts as extensively as you did, one of the brilliant business minds of our time.
They are the modern day snake oil sellers. Most important is that their product are tested for toxicity i.e. it will not poison you. As to its efficacy - "Buyers Beware"!
On Sep 23 02:50 PM pftittl wrote:
> Pyramid operation. Amway 2.
>
> Too much competition from similar, less expensive products.
On Sep 24 04:08 PM unosix8 wrote:
> Dear pf....
>
> Evidently you have no clue about what you are talking about. No clue
> on antiaging products. No clue on network marketing. Reserve your
> comments to yourself. please. You are causing unnecessary damage
> to millions of honest, hardworking participants in this extraordinary
> business model. Oh, by the way, have you heard that scientists have
> already proven that the earth is indeed round? You may still be one
> of the holdouts who still think the earth is flat.
>
> James Espiritu
On Sep 24 06:11 PM booshiepuppie wrote:
> No wait a minute....I think we are being a little hasty with poor
> pftittl. He certainly seems like an astute businessperson. I'm sure
> he would never make a statement like that, without having researched
> the facts. I'm sure that he realizes that doing so would expose him
> to the world as a clueless yutz....and of course I'm sure he is not
> that.
>
> So now, pftittl, I invite you to show your stuff. Again, you are
> not a clueless yutz, so you obviously made that statement coming
> from a position of knowledge and research.
>
> So, please pftittl, tell us all.
>
> Tell us what you found out, that the Better Business Bureau missed,
> when they examined this company, and gave it a rating of A+ (the
> highest they give.)
>
> Tell us what you found out, that the people of Dun and Bradstreet
> missed, when they gave this company a rating of 5A1 (The highest
> they give.)
>
> Tell us what you found out, that Forbes Magazine missed, when they,
> now three times in this calendar year, gave this company a favorable
> write-up, including referring to them relying on "sales, not gimmicks".
>
>
> Pftittl, you are truly to be commended. Do you realize that what
> you found out, was missed by fifty...thats FIFTY governments, when
> they welcomed this company in to their countries, and allowed them
> to do business. Wow!!! You are amazing!! This company really pulled
> the wool over the eyes oF FIFTY versions of the FDA, FTC, IRS, and
> other regulators.....But...n... couldn't fool the razor-sharp analytical
> brain that you are blessed with.
>
> Wait a minute....NBC---The Today show did a favorable blurb. You'd
> better, right now, get their producers on the phone, and tell them
> what you found out that they didn't.
>
> OOPS---This company was just recognized in seven categories at the
> International Business Awards in new York City, including one for
> having the most innovative company doing business in Asia. You'd
> better get on the phone with those award people and tell them immediately
> what you know, that they missed!!!!!
>
> Now, after you do that, you have some more international phone calls
> to make. You'd better call the parents of the recipients of thE 164
> million--repeat 164 million-repeat so even you can understand it,---164
> MILLION MEALS donated by this company and it's distributors to starving
> and severely malnourished children around the world. When you tell
> their parents about what you know about this company that they missed,
> as they watched their children go to sleep with full stomachs for
> the first time in months, I'm sure they'll be most appreciative.
>
>
> Please tell us what your research has found about Nu Skin, that all
> the abovementioned entities have missed.
>
> After all, you are, having researched those facts as extensively
> as you did, one of the brilliant business minds of our time.
With the other guy...the one whose "name" on here sounds like flatulance....yeah, it was stupid what he said...and it was fun making him look like an idiot.
But, my friend, you have crossed the line. You stated that, "They are the modern day snake oil sellers. Most important is that their product are tested for toxicity i.e. it will not poison you. As to its efficacy - "Buyers Beware"!
OK.....Time to back up what you said. You state that the products are tested for toxicity, and not efficacy. Again like your gassy friend, you, I'm sure, wouldn't make a statement like that unless you knew what you were talking about.
Here is my proposal. I maintain that there ARE clinical THIRD PARTY INDEPENDENT clinical studies that prove the efficacy of these products.
Obviously, one of us knows what they are talking about, and the other is a babbling idiot, shooting off their mouth, and showing the world what a jackass they are.
Here are my terms: If I cannot produce links to these studies and post them onto this site, then I will write you a check for $50,000. I then would have proven to the world, that, indeed I am the babbling idiot jackass moron here, and you are the smartest person on this site.
If, however, I CAN produce evidence of these third party independent clinical studies that show the efficacy of these products, then YOU will write the check....not to me, but as a donation to something called "Nourish the Children:.(which happens to be Nu Skin's initiative where, to starving and severely malnourished children, they have already donated OVER 164 MILLION MEALS).
We can have an attorney (some one neither of us knows) review the materials to see whether these are, in fact, third party clinical studies that show the product's efficacy. The loser pays the lawyer.
Amazing....jimini---This is the easiest 50K you've ever made in your life!!!!!!
Please post your acceptance of my terms. To not respond, or to decline in any way, or try some comback of ANY type that is not accepting my terms, will show everybody on this site, that yes, you are a babbling idiot that has no clue and just posts whatever fecal matter comes out of or her fingertips on to the keyboard.
So, do you accept?
There is no kickback available to a media company for a favorable report on a product of a network marketing company and how exactly would an MLM have anything a media company would need or want that would constitute an exchange for favorable press?
This is a ludicrous argument without validity or facts. Sounds like you've been burned by an unscrupulous company, of which there are many. NuSkin however is the gold standard of the industry and right now is on the verge of a monumental growth spurt that will leave those scoffers in the dust as they release a breakthrough discovery next month in the area of genetic anti-aging and are published in science journals passing peer review which is the standard of science and proof of validity. Those who know what this company has done are taking advantage of timing now while the window is open and as far as efficacy goes, this company performs clinical trials and supports its products with white papers, publishes the findings and makes the research available to the public for it's products going over and above the standard for any product sold to consumers. They also have the best guarantees on products you'll ever see from a consumer product company.
On Sep 24 07:40 PM jimini wrote:
> MLM like Nu Skin sells hope via network marketing. It is easy for
> them to get media to write positive review about them as they are
> able to reward them via advertising or other near-cash incentives.
>
>
> They are the modern day snake oil sellers. Most important is that
> their product are tested for toxicity i.e. it will not poison you.
> As to its efficacy - "Buyers Beware"!
On Sep 27 09:45 PM freedomlover wrote:
> Network marketing companies do not use media or ads to promote their
> product as the method of distribution "network marketing" by definition
> clearly states.
> There is no kickback available to a media company for a favorable
> report on a product of a network marketing company and how exactly
> would an MLM have anything a media company would need or want that
> would constitute an exchange for favorable press?
> This is a ludicrous argument without validity or facts. Sounds like
> you've been burned by an unscrupulous company, of which there are
> many. NuSkin however is the gold standard of the industry and right
> now is on the verge of a monumental growth spurt that will leave
> those scoffers in the dust as they release a breakthrough discovery
> next month in the area of genetic anti-aging and are published in
> science journals passing peer review which is the standard of science
> and proof of validity. Those who know what this company has done
> are taking advantage of timing now while the window is open and as
> far as efficacy goes, this company performs clinical trials and supports
> its products with white papers, publishes the findings and makes
> the research available to the public for it's products going over
> and above the standard for any product sold to consumers. They also
> have the best guarantees on products you'll ever see from a consumer
> product company.
I am wondering if the "THIRD PARTY INDEPENDENT clinical studies that prove the efficacy of these products" that you speak of are the Purdue clinical study, Stanford clinical bulletin and the IFCC arNOX Poster. This is all that I find on the NUS website. Are there others?
On Sep 25 01:07 PM booshiepuppie wrote:
> OK JIMINI---
>
> With the other guy...the one whose "name" on here sounds like flatulance....yeah,
> it was stupid what he said...and it was fun making him look like
> an idiot.
>
> But, my friend, you have crossed the line. You stated that, "They
> are the modern day snake oil sellers. Most important is that their
> product are tested for toxicity i.e. it will not poison you. As to
> its efficacy - "Buyers Beware"!
>
> OK.....Time to back up what you said. You state that the products
> are tested for toxicity, and not efficacy. Again like your gassy
> friend, you, I'm sure, wouldn't make a statement like that unless
> you knew what you were talking about.
>
> Here is my proposal. I maintain that there ARE clinical THIRD PARTY
> INDEPENDENT clinical studies that prove the efficacy of these products.
>
>
> Obviously, one of us knows what they are talking about, and the other
> is a babbling idiot, shooting off their mouth, and showing the world
> what a jackass they are.
>
> Here are my terms: If I cannot produce links to these studies and
> post them onto this site, then I will write you a check for $50,000.
> I then would have proven to the world, that, indeed I am the babbling
> idiot jackass moron here, and you are the smartest person on this
> site.
>
> If, however, I CAN produce evidence of these third party independent
> clinical studies that show the efficacy of these products, then YOU
> will write the check....not to me, but as a donation to something
> called "Nourish the Children:.(which happens to be Nu Skin's initiative
> where, to starving and severely malnourished children, they have
> already donated OVER 164 MILLION MEALS).
>
> We can have an attorney (some one neither of us knows) review the
> materials to see whether these are, in fact, third party clinical
> studies that show the product's efficacy. The loser pays the lawyer.
>
>
> Amazing....jimini---This is the easiest 50K you've ever made in your
> life!!!!!!
>
> Please post your acceptance of my terms. To not respond, or to decline
> in any way, or try some comback of ANY type that is not accepting
> my terms, will show everybody on this site, that yes, you are a babbling
> idiot that has no clue and just posts whatever fecal matter comes
> out of or her fingertips on to the keyboard.
>
> So, do you accept?
BTW, when you go into the company site, there are many, many products that have clinical studies posted for the products, and ingredients.
On Sep 30 12:03 PM ultreya wrote:
> Booshie,
>
> I am wondering if the "THIRD PARTY INDEPENDENT clinical studies that
> prove the efficacy of these products" that you speak of are the Purdue
> clinical study, Stanford clinical bulletin and the IFCC arNOX Poster.
> This is all that I find on the NUS website. Are there others?
I think that you may have problem if the gassy guy takes you up on your proposal. You stated that, "there ARE clinical THIRD PARTY
INDEPENDENT clinical studies that prove the efficacy of these products."
Regarding ageLOC, this is incorrect.
I have read the Purdue, Stanford, IFCC poster and I even found and read the pendng patent. None of the above mentioned items do more than show that there maybe a relationship between arNOX and appearance of age. None of the above mentioned items even mention ageLOC no less state that it can inhibit arNOX.
Now, as you state, they may be releasing more information in October but currrently you cannot show efficacy in any way shape or form with regard to ageLOC.
Moreover, I have contacted NUS and received the following reply which, in no uncertain terms, not only disavows the information in the SeekingAlpha article above but also clearly states that there is no evidence available showing ageLOC does what I hear so many of their independent sales people claim. Below is a the email I rec'd from NUS product support:
----------------------...
Unfortunately I am not sure who authored the article included below (seekingalpha.com/artic...). It appears the author did not understand the study and so misinterpreted the reseach in the article. The 7/7 Study was not conducted on our products or blend, but simply showed that arNOX activity is correlated to aging appearance. It could then be assumed that by decreasing free radical production from this intrinsic source could help individuals maintain their youthful appearance. I have attached a link to the clinical bulletin for the study below. www.nuskin.com/corp/li....
Presently we do not have any research available to our distributors on the ageLOC blend’s effect on arNOX activity. The ageLOC blend is a proprietary blend and ratio of ingredient to Nu Skin. Doctors Jim and Dorothy Morre (both of Purdue University ) have patented the ability to test for arNOX activity and we have developed our ageLOC blend based on their research and expertise. We are currently in the process of patenting this technology and may make our research available at a later date upon acquiring the patent.
----------------------...
"The 7/7 Study was not conducted on our products or blend, but simply showed that arNOX activity is correlated to aging appearance. . . . . . Presently we do not have any research available to our distributors on the ageLOC blend’s effect on arNOX activity."
So, you can see in the words of the company which you so vehemently support, you cannot prove the efficacy of the current "sizzle" product.
You next go on to state that, "one of us knows what they are talking about, and the other is a babbling idiot, shooting off their mouth, and showing the world what a jackass they are." It seems, in this case, you were speaking of yourself. You owe gassy boy an apology.
You also wrote: "Here are my terms: If I cannot produce links to these studies and post them onto this site, then I will write you a check for $50,000. I then would have proven to the world, that, indeed I am the babbling idiot jackass moron here, and you are the smartest person on this site."
You cannot produce the links of which you speak for ageLOC. Therefore, I am sorry to inform you that you have proven to the world that you are indeed a babbling idiot jackass moron. Don't worry, I don't want your money. I will leave it to you to write the check to the starving children. Maybe once you have done that you will post a link here that will lead us all to a site showing a copy of the cancelled check for $50K. (you have my permission to black out your name and address etc. just a cancelled check made our for $50k to the charity front and back please.)
Just like the links proving the efficacy of ageLOC, I doubt a copy of a cancelled check will be forth coming.
Now, I am not bashing MLM's or NUS. I have no problem with the business model and I'm sure most of NUS's skin care products are just fine.
What I do have a problem with is an independent sales force that either unknowingly or willfully misrepresents product for financial gain. From what I have seen on many different websites and blogs such as this, Nu Skin meetings I have attended, and emails passed along downline from top producers, misrepresentation with regard to ageLOC is rampant.
If you had done your due dilegence you would know that this would not be the first time this has been a problem for NUS. I have provided a link below to the FTC case against NUS in which NUS paid a 1.5 million dollar fine for misrepresentation and false claims regarding product. www.ftc.gov/os/caselis...
Just be more careful in the future. We all want to make lots of money and provide a great life for our families. However, there is no need to make or perpetuate false claims to do it.
Now, I'm sure that even in the light of the evidence (all from NUS itself) presented above, all of you NUS rep's will find some reason not to believe it. My hands are clean, you have been enlightened. So, next time you are making a sales pitch to a new prospect I hope that you use all necessary disclaimers ie, "there is no evidence to support what I have just told you about stopping the aging process etc, but that doens't matter. It works, believe me."
As a final note, Beacon Asset Management should be ashamed of the SeekingAlpha article above and hope that FINRA and the SEC are not taking notice. If this is an example of Beacon's analytical prowess, I hope that their clients are taking note.
Ultreya
On Oct 01 10:08 PM booshiepuppie wrote:
> They will be revealing that info at the convention in three weeks,
> when they intro the new ageLOC products into pre-launch. The studies
> you were referring to were for the ageLOC that are out now, used
> as the Galvanic Spa gel.
>
> BTW, when you go into the company site, there are many, many products
> that have clinical studies posted for the products, and ingredients.
>
I just joined Nu Skin a month ago and love the spa, my clients love the spa and even though I only at first wanted to buy the spa and give demos now I'm totally wanting to do the business side of it.
This company has integrity, quality products and tons of support.
Example: Hey ultreya, www.gpnworld.com/newsc...
" there are people stupid enough to believe their prejudice and BS as fact"
Once again, I hate to have to inform you that you are speaking of yourself. However, you would have to replace prejudice with bias.
If you had read the information contained in the link you posted for me (which I thought was the link I had asked for taking me to a cancelled $50k check to the starving children) with a critcal eye, you would have noticed that the new infomation does nothing to prove that ageLOC inhibits arNOX production.
Yes, the pictures were amazing, the womans wrinkles looked to be diminished. However, no more so than if she had used any other product containing ingredients that plump the dermis and tighten the epidermis.
Bottom line #1: ageLOC products may temporarily smooth the skin, as many other less expesive products do, but DOES NOT stop the aging process (and do not contradict me unless you can show a clinical peer reviewed study showing that ageLOC inhibits arNOX production. Anything else is your subjective BS)
Bottom line #2: You, with you bias and BS, are just as bad as those you condemn for their prejudice. You may even be worse as you and many other NUS reps perpetuate false information for personal gain.
Ultreya
On Oct 15 11:20 PM booshiepuppie wrote:
> First of all, LoveNS, don't you get it? The real danger with morons
> like the ones I've commented on is that there are people stupid enough
> to believe their prejudice and BS as fact. The only weapon we have
> is to expose them publicly for what they are, using the same forum
> they use..
>
> Example: Hey ultreya, www.gpnworld.com/newsc...