Nu Skin Enterprises, Inc. - Growth & Income

Nu Skin Enterprises Inc. (NUS) carried its momentum into the third quarter, once again posting another positive earnings surprise. It was its 4th consecutive positive surprise.

Management also raised its guidance for the rest of 2010, prompting analysts to revise their estimates higher. This sent the stock to a Zacks #2 Rank (Buy).

Strong Third Quarter

On November 2, Nu Skin reported third quarter earnings per share of $0.55, beating the Zacks Consensus Estimate by 7 cents. It was a 38% increase over the same quarter in 2009.

Total revenue grew an impressive 14.8%, driven by excellent growth throughout Asia. Sales in greater China improved 16%, while growth in the South Asia/Pacific region jumped a stellar 55%. Revenue in the United States increased a solid 8%.

The gross margin was an incredible 82.1% for the quarter. This was up from 81.4% in the same period last year.

Raised Guidance

Management once again raised its guidance for 2010 following the strong quarter. The company now expects to earn between $2.04 and $2.07 per share, up from previous guidance of $1.90 to $1.96.

All 10 of the analysts raised their estimates for 2010 and 2011. The Zacks Consensus Estimate for 2010 is $2.07, a 40% increase over 2009 EPS. The 2011 is $2.34, corresponding to 13% annual growth.

Solid Dividend

Nu Skin has paid a dividend since 2001. It has raised it every year since then, at an 11% compound annual growth rate.

It has a dividend yield of 1.6%.

Reasonable Valuation

Valuation looks reasonable for Nu Skin. Shares trade at 15.0x forward earnings, a discount to the industry average of 16.2x. Its PEG ratio is 1.4.

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

Read the August 18 article here.

Last Week's Growth & Income Zacks Rank Buy Stocks:

Cinemark Holdings, Inc. (CNK) recently reported strong third quarter earnings, driven by double-digit growth in ticket and concession sales. Estimates have been trending higher, too, pushing the stock to a Zacks #2 Rank (Buy).

Bancolombia S.A. (CIB) is Colombia's largest bank and stands to benefit from continued economic growth. The company recently reported a strong third quarter marked by solid loan demand and improving credit trends.

Kaman Corp (KAMN) recently delivered third quarter earnings per share that beat the Zacks Consensus Estimate by 26%, driven by double-digit sales growth and an expanding operating margin. Analysts have also been revising their estimates higher following the strong quarter.

Steris Corp (STE) was able to keep the momentum going when it recently reported its 11th consecutive positive earnings surprise. Management also raised the lower end of its guidance, prompting several analysts to raise their estimates higher.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

 
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