(NUS) Nu Skin Enterprises, Inc. – Value – Zacks Rank Buy

May 7th, 2009

Nu Skin Enterprises, Inc. (NUS) is playing the youth revolution as sales of its anti-aging and spa skin products jumped in the first quarter. The company has surprised on estimates 2 out of the last 4 quarters. NUS has attractive value characteristics, trading at 10.5x forward earnings.

Company Description

Nu Skin Enterprises is a direct selling business with three brands including Nu Skin personal skin care line, Pharmanex and Big Planet. The company operates in 48 markets around the globe and has 750,000 independent sales representatives.

The Nu Skin segment specializes in anti-aging products including the Galvanic Spa System II. Pharmanex manufactures weight loss products, nutritional supplements as well as the nutrition beverage g3.

The Big Planet segment offers the Photomax product line which allows customers to store and organize electronic pictures and memories.

Skin Products Sparkle in the First Quarter

Despite a consumer that is seemingly reluctant to open his/her wallet, Nu Skin reported first quarter results on Apr 30 that surprised on estimates by 4 cents, or 16.67%. Excluding items, earnings per share were 28 cents compared to 21 cents in the year ago period.

Total revenue fell 1% to $296.2 million from $298.1 million, but increased 4% when adjusted for currency fluctuations. The Nu Skin segment was the big winner, as revenue grew 19% based on strong sales of the Galvanic Spa System.

“Going forward, we will continue to fuel the success of our Nu Skin Galvanic Spa System and look forward to building on our revolutionary ageLOC anti-aging platform at our 25th Anniversary convention in the fourth quarter of this year,” said Truman Hunt, CEO.

2009 Outlook

Sales in Europe were especially healthy in the first quarter, gaining 17% year-over-year. The company intends to move forward with its international diversification strategy and will begin initial marketing efforts in Columbia and Turkey during the second quarter.

For the second quarter, the company forecasts EPS in the range of 29 to 31 cents.

For the full-year, guidance was in the range of $1.12 to $1.20, excluding 14 cents in restructuring charges.

Consensus Estimates Rise

Given the first quarter surprise and guidance range, covering analysts have been busy raising estimates in the last week. Second quarter consensus is at 30 cents.

Full year consensus estimates jumped 3 cents to $1.16, in the middle of the company’s guidance range.

Value Fundamentals

Nu Skin Enterprises is a Zacks #1 Rank (strong buy) stock. It is trading with a forward P/E of 10.5. Its price-to-book ratio is 2.8. The company also has a stellar 5-year average return on equity (ROE) of 21.70%.

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(NUS) Nu Skin Enterprises, Inc. – Value – Zacks Rank Buy

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