Nu Skin: Earnings to Surpass Estimates, Shares Keep Soaring

Oct.21.09 | About: Nu Skin (NUS)

Nu Skin Enterprises Inc. (NYSE:NUS) climbed more than 13 percent in early morning trading Tuesday after the company pre-announced quarterly earnings that broke previous records and surpassed analysts expectations, and raised guidance for full year earnings. Nu Skin, one of our favored “aging” demographic plays, has been on a tear for the past month, up about 28 percent since Oct. 1, and up almost 200 percent from its March 9 low of $8.04. In today’s action the stock hit a four-year high of $24.85 before fading to about $23 in mid-day trading.

The company reported that it expects revenues for the third quarter of $334.2 million, 8 percent higher than third quarter 2008, and that it expects earnings per share of between 39 to 40 cents compared to 26 cents in the prior-year quarter. Analysts on average had been expecting the company to earn 34 cents per share on revenues of $315.1 million.

Looking forward, Nu Skin reported expected full year revenues of $1.29 billion to $1.30 billion, with earnings of $1.25 to $1.27 per share, including a restructuring charge of about 13 cents. Analysts had forecast on average revenues of $1.26 billion, producing earnings of $1.28 per share, not accounting for any additional charges.

Nu Skin pre-released its earnings expectations in advance of its 25th Anniversary Global Convention Oct. 22-24, at which time the company plans to launch its new “ageLOC anti-aging skin-care product line, which the company believes will be its “most significant new product launch ever.” The company will provide complete financial results before the market opening on Thursday, Oct. 29.

Despite the company’s significant share price increase–both this month and since the March lows–we believe the shares are still undervalued and that the company will continue to surprise to the upside in the years ahead.

Disclosure: No positions, but the company is profiled in our October
Age Curve Report (.pdf), and featured in our model Beacon Master Portfolio
(.pdf).