After reading Nu Skin Enterprises, Inc.’s (NYSE:NUS) most recent earnings announcement (30 June 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
Commentary On NUS’s Past Performance
NUS’s trailing twelve-month earnings (from 30 June 2019) of US$125m has declined by -15% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -12%, indicating the rate at which NUS is growing has slowed down. Why could this be happening? Let’s examine what’s transpiring with margins and whether the rest of the industry is facing the same headwind.
In terms of returns from investment, Nu Skin Enterprises has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. Furthermore, its return on assets (ROA) of 8.2% is below the US Personal Products industry of 10%, indicating Nu Skin Enterprises’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Nu Skin Enterprises’s debt level, has increased over the past 3 years from 17% to 23%.
What does this mean?
Nu Skin Enterprises’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. In some cases, companies that experience a prolonged period of reduction in earnings are going through some sort of reinvestment phase in order to keep up with the recent industry expansion and disruption. I recommend you continue to research Nu Skin Enterprises to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NUS’s future growth? Take a look at our free research report of analyst consensus for NUS’s outlook.
- Financial Health: Are NUS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.
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