Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Shares of Nu Skin Enterprises, Inc. Dropped

By Jeremy Bowman - Mar 3, 2014 at 6:46PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is this meaningful? Or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Nu Skin Enterprises ( NUS 0.41% ) were cracking up today, falling as much as 13% and finishing down 11% after providing a disappointing outlook in its fourth-quarter report.

So what: The beauty and nutritional-products maker saw shares fall off a cliff in January after the Chinese government's official newspaper accused it of being a pyramid scheme. While Nu Skin has insisted that it's operating within all Chinese laws, it is currently auditing its business in that country to verify compliance, and has taken to steps to keep a lower profile in China by temporarily suspending all business promotional meetings and all applications for new sales representatives. As a result, Nu Skin now expects top-line growth in the current quarter of 20%-24% to $650 million to $670 million, and EPS of $0.90-$0.94. Analysts had expected sales to come in at $732.2 million on 33% growth, and per-share profit of $1.20. 

Now what: The key word in Nu Skin's outlook seems to be "temporary." CFO Ritch Wood explained: "We are early in the process of understanding the impact of recent events in China on our business, so it is difficult to project how reflective anticipated first quarter results will be of results for the remainder of the year. We believe we will be in a better position to provide specific updated annual guidance in conjunction with our first-quarter earnings release." Despite the uncertainty, Nu Skin is still growing strongly. Unless the audit committee finds something particularly egregious, I'd expect shares to bounce back eventually. 


This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Nu Skin Enterprises, Inc. Stock Quote
Nu Skin Enterprises, Inc.
$44.43 (0.41%) $0.18

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/04/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.