Personal care company Nu Skin (NYSE:NUS) reported Q4 CY2024 results topping the market’s revenue expectations, but sales fell by 8.8% year on year to $445.6 million. On the other hand, next quarter’s revenue guidance of $355 million was less impressive, coming in 12.3% below analysts’ estimates. Its non-GAAP profit of $0.38 per share was 72.3% above analysts’ consensus estimates.
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Nu Skin (NUS) Q4 CY2024 Highlights:
- Revenue: $445.6 million vs analyst estimates of $436.1 million (8.8% year-on-year decline, 2.2% beat)
- Adjusted EPS: $0.38 vs analyst estimates of $0.22 (72.3% beat)
- Management’s revenue guidance for the upcoming financial year 2025 is $1.55 billion at the midpoint, missing analyst estimates by 8.5% and implying -10.5% growth (vs -12% in FY2024)
- Adjusted EPS guidance for the upcoming financial year 2025 is $1.10 at the midpoint, beating analyst estimates by 30.6%
- Operating Margin: -11.9%, down from 3.3% in the same quarter last year
- Market Capitalization: $314.2 million
Company Overview
With person-to-person marketing and sales rather than selling through retail stores, Nu Skin (NYSE:NUS) is a personal care and dietary supplements company that engages in direct selling.
Personal Care
While personal care products products may seem more discretionary than food, consumers tend to maintain or even boost their spending on the category during tough times. This phenomenon is known as "the lipstick effect" by economists, which states that consumers still want some semblance of affordable luxuries like beauty and wellness when the economy is sputtering. Consumer tastes are constantly changing, and personal care companies are currently responding to the public’s increased desire for ethically produced goods by featuring natural ingredients in their products.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for years.
With $1.73 billion in revenue over the past 12 months, Nu Skin is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers.
As you can see below, Nu Skin struggled to generate demand over the last three years. Its sales dropped by 13.7% annually, showing demand was weak. This is a rough starting point for our analysis.
This quarter, Nu Skin’s revenue fell by 8.8% year on year to $445.6 million but beat Wall Street’s estimates by 2.2%. Company management is currently guiding for a 14.9% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 2% over the next 12 months. Although this projection is better than its three-year trend, it's tough to feel optimistic about a company facing demand difficulties.
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Cash Is King
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
Nu Skin has shown mediocre cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 3.6%, subpar for a consumer staples business.
Key Takeaways from Nu Skin’s Q4 Results
We were impressed by how significantly Nu Skin blew past analysts’ EPS expectations this quarter. We were also glad its full-year EPS guidance came in much higher than Wall Street’s estimates. The stock traded up 22.3% to $7.84 immediately after reporting.
Should you buy the stock or not? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.
