Nu Skin Q3 Earnings & Sales Miss Estimates, 2024 Guidance Cut

It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both.

The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.

It also includes access to the Zacks Style Scores.

What are the Zacks Style Scores?

Developed alongside the Zacks Rank, the Zacks Style Scores are a group of complementary indicators that help investors pick stocks with the best chances of beating the market over the next 30 days.

Each stock is given an alphabetic rating of A, B, C, D or F based on their value, growth, and momentum qualities. With this system, an A is better than a B, a B is better than a C, and so on, meaning the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value Score

Finding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.

Growth Score

Growth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.

Momentum Score

Momentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.

VGM Score

If you want a combination of all three Style Scores, then the VGM Score will be your friend. It rates each stock on their combined weighted styles, helping you find the companies with the most attractive value, best growth forecast, and most promising momentum. It's also one of the best indicators to use with the Zacks Rank.

How Style Scores Work with the Zacks Rank

A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.

Investors can count on the Zacks Rank's success, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988, more than double the S&P 500's performance. But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

But it can feel overwhelming to pick the right stocks for you and your investing goals with over 800 top-rated stocks to choose from.

That's where the Style Scores come in.

To maximize your returns, you want to buy stocks with the highest probability of success. This means picking stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you find yourself looking at stocks with a #3 (Hold) rank, make sure they have Scores of A or B as well to ensure as much upside potential as possible.

Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.

A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: Abercrombie & Fitch (ANF)

Abercrombie & Fitch Co. operates as a specialty retailer of premium, high-quality casual apparel for men, women, and kids through a network of approximately 757 stores across North America, Europe, Asia and the Middle East, as well as the e-commerce sites www.abercrombie.com, www.abercrombiekids.com, www.hollisterco.com, www.gillyhicks.com and www.socialtourist.com.

ANF is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.

Additionally, the company could be a top pick for growth investors. ANF has a Growth Style Score of A, forecasting year-over-year earnings growth of 63.4% for the current fiscal year.

Two analysts revised their earnings estimate upwards in the last 60 days for fiscal 2025. The Zacks Consensus Estimate has increased $0.15 to $10.26 per share. ANF boasts an average earnings surprise of 28%.

With a solid Zacks Rank and top-tier Growth and VGM Style Scores, ANF should be on investors' short list.

Zacks Investment Research

Shares of Under Armour, Inc. UAA surged 27.2% in yesterday's trading session, fueled by the company’s better-than-expected second-quarter results. The strong performance prompted management to raise the fiscal 2025 outlook. While revenues saw a year-over-year decline, the company’s bottom line showed improvement compared to the same period last year.

Under Armour’s Quarterly Performance: Key Insights

The Baltimore, MD-based company reported adjusted earnings of 30 cents a share, which beat the Zacks Consensus Estimate of 19 cents. This figure increased from 24 cents a share reported in the year-ago period.

See the Zacks Earnings Calendar to stay ahead of market-making news.

Meanwhile, net revenues of $1,399 million came ahead of the Zacks Consensus Estimate of $1,383 million but decreased 10.7% from the prior-year quarter. The metric declined 10% on a currency-neutral basis.

Wholesale revenues fell 12.1% to $826 million, while direct-to-consumer revenues saw a 7.6% increase, reaching $550.3 million. Revenues from owned and operated stores remained flat, while e-commerce sales declined 21% due to a planned decrease in promotional activities. E-commerce revenues accounted for 30% of the total direct-to-consumer business during the quarter.

Under Armour, Inc. Price, Consensus and EPS Surprise

Under Armour, Inc. price-consensus-eps-surprise-chart | Under Armour, Inc. Quote

Breaking Down Under Armour’s Top Line

By product category, Apparel revenues declined 11.5% year over year to $947.2 million compared to the Zacks Consensus Estimate of $947.6 million. Footwear revenues decreased 10.9% to $312.8 million, exceeding the consensus estimate of $304.1 million. Revenues from the Accessories category rose 2.1% to $116.4 million, outperforming the consensus estimate of $99.6 million. Meanwhile, Licensing revenues dropped 13.4% to $24.8 million, falling short of the consensus estimate of $51 million.

Revenues from North America declined 12.9% to $863.3 million, exceeding the Zacks Consensus Estimate of $830.7 million. Meanwhile, revenues from the international business decreased 6.1% (down 5.2% on a currency-neutral basis) to $538 million.

Within the international segment, revenues from Europe, the Middle East and Africa ("EMEA") fell 1.4% to $283.2 million, just below the consensus estimate of $283.8 million. Revenues from the Asia-Pacific ("APAC") dropped 10.5% to $207.7 million, slightly below the consensus estimate of $208.4 million, while Latin America saw a 12.5% decline to $46.9 million, underperforming the consensus estimate of $56.4 million.

Focus on UAA’s Margins

The company’s gross margin expanded 200 basis points to 49.8% from the prior-year period. This was driven by the decline in product and freight costs, lower discounting levels in the direct-to-consumer business and a favorable channel mix.

Adjusted selling, general, and administrative (SG&A) expenses declined 13% to $530.1 million, driven by lower marketing expenses. Adjusted operating income came in at $166.1 million, up from $139.5 million reported in the year-ago period.

UAA Financial Snapshot

Under Armour ended the quarter with cash and cash equivalents of $530.7 million, long-term debt (net of current maturities) of $594.6 million and total stockholders' equity of $1,985.2 million. For fiscal 2024, management expects capital expenditures between $190 million and $210 million.

A Sneak Peek Into Under Armour’s FY25 Outlook

Under Armour foresees fiscal 2025 revenues to decline by a low double-digit percentage, with North American sales projected to drop 14-16% as the company undertakes a business reset in the region. Internationally, revenues are anticipated to see a low single-digit decrease, with stable results in the EMEA offset by a high single-digit decline in the APAC due to macroeconomic pressures.

The gross margin is anticipated to expand by 125-150 basis points, up from the prior expectation of a 75-100 basis point improvement, driven by lower promotional activities in direct-to-consumer channels and favorable product costs.

SG&A expenses are expected to rise in the mid-to-high single digits due to litigation settlement costs. Adjusted SG&A expenses are projected to decline by a low-to-mid-single-digit percentage. This includes an additional $25 million in marketing investments to support the brand’s long-term positioning.

Operating loss is now projected between $176 million and $196 million, an improvement from the prior range of $220 million-$240 million. Adjusted operating income, which excludes restructuring charges, transformation costs, litigation expenses and insurance recoveries, is forecasted at $165 million to $185 million, up from the previous estimate of $140 million to $160 million.

Loss per share is expected to range from 48 cents to 51 cents, an improvement from the prior estimate of 53-56 cents. Adjusted earnings per share are now projected between 24 cents and 27 cents compared to the earlier projection of 19 cents to 21 cents.

UAA Expects Q3 Revenues to Decline

For the third quarter, Under Armour anticipates a revenue decline of approximately 10%. This projection reflects ongoing challenges in the North American region and the company's proactive strategies to reduce promotional activities within its direct-to-consumer businesses. The company expects fourth-quarter revenues to face additional pressures due to timing differences between this year's and last year's flows within its North American and APAC wholesale businesses, as well as tougher year-over-year comparisons in North America Factory House.

The strengthening of the U.S. dollar is also creating foreign exchange headwinds. However, the company projects third-quarter gross margin will increase by 150 to 175 basis points, driven by lower product costs from supply-chain efficiencies, favorable foreign exchange impacts, and the benefits of reduced discounting and promotions in the direct-to-consumer business.

Adjusted SG&A expenses are expected to rise in the second half of the fiscal year, particularly in the third quarter, when the metric is expected to increase by a mid-single-digit percentage rate. As a result, Under Armour forecasts the third-quarter adjusted operating income in the range of $20 million-$30 million, with adjusted earnings per share projected between 2 cents and 4 cents.

This Zacks Rank #3 (Hold) stock has advanced 40.6% in the past three months compared with the industry’s rise of 17.5%.

Stocks to Consider

Abercrombie & Fitch ANF, an omnichannel specialty retailer of apparel and accessories for men, women and kids, carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year revenues and earnings calls for growth of 13% and 63.4%, respectively, from the year-ago reported figures. Abercrombie & Fitch has a trailing four-quarter earnings surprise of 28%, on average.

The Gap GAP, the largest specialty apparel company in the United States and a house of iconic brands, including Old Navy, Gap, Banana Republic and Athleta, carries a Zacks Rank #2.

The Zacks Consensus Estimate for Gap’s current financial-year revenues and earnings suggests growth of 0.5% and 31.5%, respectively, from the year-ago reported figures. GAP has a trailing four-quarter earnings surprise of 142.8%, on average.

Ralph Lauren Corporation RL, a global leader in the design, marketing and distribution of luxury lifestyle products, currently carries a Zacks Rank #2. RL has a trailing four-quarter earnings surprise of 10.3%, on average.

The Zacks Consensus Estimate for Ralph Lauren’s current financial year’s sales and earnings implies growth of 1.8% and 9.9%, respectively, from the year-ago reported numbers.

Zacks Investment Research

Farmer Brothers (FARM) came out with a quarterly loss of $0.24 per share versus the Zacks Consensus Estimate of a loss of $0.23. This compares to loss of $0.06 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of -4.35%. A quarter ago, it was expected that this coffee and tea company would post a loss of $0.22 per share when it actually produced a loss of $0.22, delivering no surprise.

Over the last four quarters, the company has surpassed consensus EPS estimates just once.

Farmer Brothers, which belongs to the Zacks Food - Natural Foods Products industry, posted revenues of $85.07 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.31%. This compares to year-ago revenues of $81.89 million. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Farmer Brothers shares have lost about 40.2% since the beginning of the year versus the S&P 500's gain of 24.3%.

What's Next for Farmer Brothers?

While Farmer Brothers has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Farmer Brothers: unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.18 on $89.1 million in revenues for the coming quarter and -$0.69 on $350 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Food - Natural Foods Products is currently in the top 20% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

One other stock from the broader Zacks Retail-Wholesale sector, Abercrombie & Fitch (ANF), is yet to report results for the quarter ended October 2024. The results are expected to be released on November 26.

This teen clothing retailer is expected to post quarterly earnings of $2.31 per share in its upcoming report, which represents a year-over-year change of +26.2%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

Abercrombie & Fitch's revenues are expected to be $1.18 billion, up 11.3% from the year-ago quarter.

Zacks Investment Research

Nu Skin Enterprises (NUS) came out with quarterly earnings of $0.17 per share, missing the Zacks Consensus Estimate of $0.20 per share. This compares to earnings of $0.56 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of -15%. A quarter ago, it was expected that this seller of skin care and nutritional products through a direct-selling model would post earnings of $0.18 per share when it actually produced earnings of $0.21, delivering a surprise of 16.67%.

Over the last four quarters, the company has surpassed consensus EPS estimates three times.

Nu Skin, which belongs to the Zacks Cosmetics industry, posted revenues of $430.15 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 3.14%. This compares to year-ago revenues of $498.77 million. The company has topped consensus revenue estimates two times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Nu Skin shares have lost about 66.6% since the beginning of the year versus the S&P 500's gain of 24.3%.

What's Next for Nu Skin?

While Nu Skin has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Nu Skin: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.30 on $457.1 million in revenues for the coming quarter and $0.78 on $1.76 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Cosmetics is currently in the bottom 20% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

One other stock from the same industry, European Wax Center, Inc. (EWCZ), is yet to report results for the quarter ended September 2024. The results are expected to be released on November 14.

This company is expected to post quarterly earnings of $0.06 per share in its upcoming report, which represents a year-over-year change of -33.3%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

European Wax Center, Inc.'s revenues are expected to be $54.65 million, down 1.9% from the year-ago quarter.

Zacks Investment Research