Nu Skin (NYSE: NUDE) – supplier of consumer goods in the field of beauty and personal care. The company has survived the coronacrisis normally and offers shareholders solid payments. But rising costs can ruin everything..
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What do they earn
The company is engaged in the development and sale of consumer goods. According to the annual report, its revenue is as follows:
- products for beauty and personal care — 53,5%;
- health — 39,4%. This category of products includes food additives and weight control systems;
- other — 7,1%. This is revenue from non-core operations: from the investment activity of the Rhyz fund, various services in the field of technology and from the sale of household goods.
The company has its production only in China, and 82% products for it are produced by third-party contractors. The company mainly makes sales through networks of representatives, but there are also direct sales.
Revenue by country and region:
- mainland China — 21%;
- America - 20%;
- South Korea - 13%;
- Other countries in South-East Asia and the Pacific — 13%;
- Europe, Middle East and Africa - 11%;
- Hong Kong and Taiwan — 6%;
- Rhyz Foundation's activities around the world — 6%.
Arguments in favor of the company
Dividends. The company pays 1,54 $ per share per year. It is approximately 3,45% per annum - a fairly high yield in modern times. Forecasts of business development do not promise insane growth, but in general give us hope, that the company will maintain the current performance. So,, one can cautiously hope to maintain the current level of payments.
Nu Skin business situation in 2021 and forecast for 2022
| 2021 | In constant currency | 2022 | In constant currency | |
|---|---|---|---|---|
| Mainland China | −9% | −15% | −5 to 5% | −5 to 5% |
| Of America | 21% | 20% | 5—10% | 6—12% |
| South Korea | 9% | 6% | 0—4% | 2—6% |
| South-East Asia and the Pacific | −7% | 9% | −10 to −5% | −10 to −5% |
| Japan | −3% | 0% | −5 to 0% | −1 to 4% |
| Europe, Middle East and Africa | 23% | 18% | 5—10% | 8—13% |
| Hong Kong and Taiwan | 1% | −2% | −5 to 5% | −5 to 5% |
| The company as a whole | 4% | 1% | −1 to 3% | 0—5% |
Courage in battle. The company's business coped well with the coronacrisis, which was supposed to limit the company's representatives to the possibility of presenting its products. However, online has largely offset the negative effect of the endless pandemic.. In addition, Nu Skin is cautiously developing various forms of online sales..
A miracle can not be expected, but the company is normally experiencing a new reality. Considering, that in the main markets for Nu Skin, the indicators of the normality index are in principle at a more or less acceptable level., I think, that these stocks may well attract investors through stability. Wild growth of operating indicators here, probably, will never be. But that, what the company has right now, looks very good.
Inexpensive. The company is inexpensive in absolute and relative numbers: capitalization — 2.22 billion dollars, P / E = 1,58 and P / S below 1.
Can buy. Considering all of the above, the company may well be acquired by some large holding. Nu Skin is a recognizable well-known brand, the company generates stable cash flow and, In general, won't be the worst investment for a major cosmetics manufacturer..
What can get in the way
Accounting. If you want to take these stocks in the hope of a sudden increase in payments twice as much, I hasten to disappoint you. The company is already spending. 53,84% of its profit on dividends, so there is no special space for increasing payments here.
The company has a considerable debt burden totaling $993.708 million., of which 529.694 million must be repaid within a year. There is not so much money at the disposal of the company: 339,593 million in accounts and 41.229 million in counterparty debt.
It is also worth considering, that the total amount of debts of the company in retrospect rather shows a tendency to increase, although the last couple of years it has been declining. So that, I think, a significant increase in payments should not be expected here.
Production. The company's business as a whole is treading water, but the growth of production costs in the world for her in this case can be considered a big minus - after all, most of the goods she buys from third-party manufacturers. Nu Skin's business hasn't had a higher margin for the past five years. 9% from proceeds, so I'd be wary, that costs will have a negative effect on its reporting.
Resume
Nu Skin is an interesting company: quite stable and with good dividends. So it deserves consideration for investments "under the divas" for those, who cares about the issue of "working money".
