Should You Investigate Nu Skin Enterprises, Inc. (NYSE:NUS) At US$50.82?

Nu Skin Enterprises, Inc. (NYSE:NUS), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$62.44 at one point, and dropping to the lows of US$50.82. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Nu Skin Enterprises' current trading price of US$50.82 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Nu Skin Enterprises’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Nu Skin Enterprises

Is Nu Skin Enterprises still cheap?

Good news, investors! Nu Skin Enterprises is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Nu Skin Enterprises’s ratio of 10.91x is below its peer average of 16.91x, which indicates the stock is trading at a lower price compared to the Personal Products industry. However, given that Nu Skin Enterprises’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Nu Skin Enterprises generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -0.2% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Nu Skin Enterprises. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although NUS is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to NUS, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on NUS for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. In terms of investment risks, we've identified 2 warning signs with Nu Skin Enterprises, and understanding these should be part of your investment process.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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