Nu Skin (NUS) Settles SEC Probe; Stock Up 5% On Raised View

Nu Skin Enterprises Inc. (NYSE:NUS) has reportedly settled an agreement with the Securities and Exchange Commission (“SEC”) related to a probe into the company’s charitable contribution in China in 2013, per Reuters. The skincare products maker has also raised its guidance for the third quarter of 2016. Shares of Nu Skin jumped 5.77% after market close on Sep 21.

Per sources, Nu Skin has agreed to pay $765,688 to the SEC after the agency found the company's books and internal controls related to the donation were insufficient. We note that Nu Skin reportedly stated in Feb 2016 that it would pay $47 million as settlement charges for claims that it operates a pyramid scheme in China, and had made false and misleading statements about its operations.

Like Nu Skin, another multi-level marketer, Herbalife Ltd. (NYSE:HLF) reached a settlement with the Federal Trade Commission (“FTC”), and agreed to pay $200 million as penalty charges. The FTC had charged that Herbalife's earnings potential claims were deceptive and its compensation structure hinged on recruiting other product distributors instead of its selling capability.

Nu Skin now projects third-quarter revenue at the high end of its previously issued guidance range of $560−$580 million, announced during the second-quarter conference call.

We note that Nu Skin has been performing quite well of late, driven by innovation. In April, the company introduced its ageLOC Youth nutritional product in South Asia Pacific, which drove the region’s revenue growth by 42%, on a constant currency basis.

While this skin care and nutritional products retailer’s second-quarter 2016 earnings met the Zacks Consensus Estimate, revenues beat the same.

In the second half of the year, the company intends to focus on the full-time launch of ageLOC Me and its global product initiatives. Earnings in the third quarter are expected in the range of 80–84 cents per share.

Better-than-expected second-quarter results, along with new product launches and a favorable view on currency, also led management to raise its full-year 2016 outlook. It now expects revenues in a range of $2.20−$2.24 billion, including a negative foreign currency impact of 2%−3%. The company had previously projected revenues in a range of $2.16−$2.20 billion, with currency impact of 4%−5%. Adjusted earnings are expected in a band of $2.80−$2.90 per share.

Nu Skin currently sports a Zacks Rank #1 (Strong Buy). Other stocks in the same industry worth considering are Inter Parfums Inc. (NASDAQ:IPAR) and Coty, Inc. (NYSE:COTY) , both carrying the same Zacks Rank as Nu Skin. You can see the complete list of today’s Zacks #1 Rank stocks here.

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