Nu Skin (NUS) Navigates a Tough Landscape on Growth Strategies

Nu Skin Enterprises, Inc. NUS has lately been dealing with challenges related to customer and affiliate acquisition stemming from a tough macroeconomic landscape. Volatile foreign currency movements have also been weighing on the company’s performance. The global macroeconomic situation is likely to remain difficult in the near term, which is also reflected in the company’s view for 2024.

Nu Skin anticipates 2024 revenues in the band of $1.73-$1.87 billion for 2024, which suggests a 12-5% decline from the year-ago period’s reported figure. Management envisions an adjusted EPS of 95 cents to $1.35. The projection implies a decrease from adjusted earnings of $1.85 recorded in 2023. For the second quarter of 2024, Nu Skin expects revenues between $420 million and $455 million, which suggests a decline of 16% to 9% from the year-ago quarter’s reported level. Nu Skin expects adjusted earnings of 10-20 cents a share for the second quarter compared with the year-ago period’s figure of 54 cents.

That being said, Nu Skin looks well-positioned for the long term due to its strategic initiatives like relevant product launches and technological advancements. Strength in the Rhyz business and a focus on Nu Vision 2025 also bode well.

Nu Vision 2025 Shows Promise

Nu Skin is on track with its Nu Vision 2025 strategy to become the world’s leading integrated beauty and wellness company driven by a dynamic affiliate opportunity platform. The strategy is based on key strategic imperatives like the EmpowerMe personalized beauty and wellness strategy with connected beauty devices, the affiliate-powered social commerce business model and the expansion of the digital platform.

The company’s EmpowerMe strategy helps empower affiliates to attract, connect and nurture consumers. The strategy is designed to improve product consumption, attract new customers and affiliates and grow recurring revenues while increasing lifetime value.

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Innovative Launches Help

With the help of advanced technology and well-strategized product programs, Nu Skin tries to capture greater market share and maintain growth momentum. The company’s long-term strategies stand on three key pillars — Products, Programs and Platforms. NUS has been successfully launching innovative beauty devices, which have become an important part of its growth. Nu Skin’s first-quarter 2024 results included positive contributions from key product launches such as ageLOC WellSpa iO, RenuSpa iO and TRMe.

The ageLOC WellSpa iO has been a solid addition to the company’s beauty device system brands, generating impressive response. The introduction of Mind 360, Nu Skin’s latest innovation, highlights its focus on the fast-growing brain health market. Additionally, Nu Skin intends to enter India, which is one of the fastest direct-selling markets, which will help the company strengthen its customer base.

Strength in Rhyz Business

Nu Skin’s Rhyz business emerges as a cornerstone of its strategic vision, highlighted by its remarkable growth trajectory and significant contribution to the company’s revenue stream. Rhyz represents a cohesive ecosystem comprising consumer, technology and manufacturing entities, all dedicated to pioneering innovation within the realms of beauty, wellness and lifestyle. Experiencing nearly 60% revenue growth in the first quarter of 2024, Rhyz accounted for 15% of total enterprise revenues and is anticipated to reach 20% to 25% by 2025.

The success of this business reflects Nu Skin’s commitment to capitalizing on evolving consumer trends, particularly in influencer and affiliate marketing, which are projected to surge in the coming years. By investing in Rhyz’s manufacturing capabilities, technology advancements and creator-led indie beauty brands, Nu Skin is strategically positioning itself to drive sustained growth and value creation within the beauty, wellness and lifestyle market.

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Price Performance & Valuation

Reflecting the near-term concerns, shares of Nu Skin have tumbled 11.5% in the past three months compared with the industry’s decline of 19.5%.

However, Nu Skin appears quite undervalued compared to its peers and the market at large. The company’s forward 12-month price-to-earnings ratio stands at 8.49, significantly lower than the industry’s ratio of 24.62 and the S&P 500’s ratio of 21.91. This could indicate that the stock is currently priced lower relative to its earnings potential, reflecting its capability to perform well in the future. NUS has a Value Score of A, indicating strong potential for price appreciation based on fundamental valuation metrics.

Nu Skin currently carries a Zacks Rank #3 (Hold)

Solid Staple Picks

Vital Farms Inc. VITL offers a range of produced pasture-raised foods. It currently sports a Zacks Rank #1 (Strong Buy). VITL has a trailing four-quarter average earnings surprise of 102.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings indicates growth of 22.6% and 62.7%, respectively, from the year-ago reported numbers.

Freshpet, Inc. FRPT, a pet food company, has a trailing four-quarter earnings surprise of 118.2%, on average. FRPT currently sports a Zacks Rank #1.

The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings suggests growth of 24.8% and 177.1%, respectively, from the prior-year reported level.

Utz Brands Inc. UTZ, which manufactures a diverse range of salty snacks, currently carries a Zacks Rank #2 (Buy). UTZ has a trailing four-quarter earnings surprise of 2%, on average.

The consensus estimate for Utz Brands’ current financial-year earnings calls for growth of 26.3% from the year-ago reported numbers.

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