Wednesday, June 7, 2017

Nu Skin Enterprises - [NUS]

This is the first time I have heard of Nu Skin and to be honest I am a fan.

"Nu Skin Enterprises is a $2.0 billion plus direct selling company that markets premium quality personal care, nutrition, and technology products through a global network of approximately 1 million Actives and Sales Leaders." -Investor Relations on Nu Skin Website

First things first is their fairly consistent dividend since the beginning of 2001. They missed a few quarters here and there, but it has grown at a steady pace to reward their investors. However, besides the dividend I don't know if I would plan on investing in them long term because I have only been watching it for a couple days. Though they've been in business since 1984 and traded publicly since late 1996, I haven't looked into their business and how they stack up to competitors yet. So why don't we look!

Finviz categorizes NUS under consumer goods and more specifically personal products. Based on market capitalization size, the other most closely related companies are ELF, ENR, and EPC ( e.l.f. Beauty, Energizer Holdings, Edgewell Personal Care Products).

The P/E of 19.21 sits comfortably in the middle of the other three and at the low end of the industry as a whole.

The P/B is high. 4.39. Compared to the other three companies listed it is the second lowest. But when you look at the industry as a whole then you realize that is middle-of-the-pack and not considered cheap in the long term. P/B differs within each sector and industry. It does more good to look at it holistically as opposed to brushing it off if it isn't under 1. If price to book is a go-to for yourself, then long term this doesn't look like the answer.

The consensus prediction of earnings per share over the next 5 years is a modest growth of 8.4%. It is the lowest of the other three stocks most closely related to this one. However, Nu Skin was the only company to have positive sales over the past 5 years - 5.10% increase. When looking at the industry as a whole, NUS is one of a handful of companies that has EPS growth over the next 5 years as well as positive sales in the past 5 years. That bodes well for the future growth of the company and the dividend it shells out.

There are 24 companies in the personal product industry and only 14 have a dividend. There are 7 companies with a larger dividend yield. Of those 7, two have been very inconsistent and one is too new to make a rational decision. 

Nu Skin also has one of the lowest debt/equity ratios. I may be one of the very few who admires this ratio, but in my eyes the lower the better. Especially in this industry where having large amounts of debt is not necessary. They have one of the lowest long term debt/equity as well. Surprisingly the have the highest ROI (return on investment). It's surprising because they have a very low amount of debt but still generate great returns from their returns without leverage. 

Long term looks pretty good actually. Their last earnings report had positives and negatives. They beat EPS estimates, underperformed their sales estimates, but managements view long term did not change. 
With the dividend, low levels of debt, and consistent growth this seems like a good long term investment option. 

Looking at it through technical eyes, there seems to be some shorter term potential. 

A couple things of note here. The MACD on the bottom chart just crossed over the signal line. It is not a strong cross as it happened above zero but a cross none the less. More noticeable is the moving average cross. The 50 day crossed above the 200 day which is a good sign. Again, this isn't that strong either because it crossed as the stock price fell. It as since recovered. 

Looking at the chart on finviz, NUS seems to be channeling upward. When it bounced off the 200 day moving average, it also bounced off the base of the channel

Nu Skin's chart is also forming a wedge. In the next week or two we'll likely see a consolidation of price before it breaks above or below with strong volume. Depending on which way it breaks the wedge will determine whether one should buy or sell. 

Overall, I like the long term potential of the company as well as the short term gains that may become available.

Edit: Tuesday, June 13th. Nu Skin broke above the wedge patter after three straight positive days. That is a good sign moving forward for the company and ultimately the stock. I am still have ambitions on the company and believe it will continue to post upward movement. Based upon recent trends and other price predictions, I would start getting wary near $61.00.

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