Why Nu Skin (NUS) Is Collapsing Today

NEW YORK (TheStreet) -- Nu Skin (NUS) collapsed 18.3% to $111.60 Wednesday following a report from Chinese paper People's Daily which the company says is inaccurate.

The report says that Nu Skin's Chinese operations amount to a pyramid scheme. A translation of the story says the company uses "brainwashing" on its team members.

Nu Skin corporate communications director Kara Schneck says the report "contains inaccuracies and exaggerations that are not representative of our business in China." Schneck says the publication did not contact Nu Skin for information or verification, and that the company is "in full compliance" with Chinese law.

TheStreet Ratings team rates NU SKIN ENTERPRISES as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate NU SKIN ENTERPRISES (NUS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • NUS's very impressive revenue growth greatly exceeded the industry average of 3.0%. Since the same quarter one year prior, revenues leaped by 76.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 106.89% and other important driving factors, this stock has surged by 237.21% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NUS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • NU SKIN ENTERPRISES reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, NU SKIN ENTERPRISES increased its bottom line by earning $3.52 versus $2.37 in the prior year. This year, the market expects an improvement in earnings ($5.82 versus $3.52).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Personal Products industry. The net income increased by 104.7% when compared to the same quarter one year prior, rising from $54.18 million to $110.90 million.
  • The gross profit margin for NU SKIN ENTERPRISES is currently very high, coming in at 85.84%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.95% is above that of the industry average.
  • You can view the full analysis from the report here: NUS Ratings Report

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