NUS

Nu Skin screens absurdly cheap — 1.6x reported EPS, 0.2x sales, a $241M market cap against $805M of equity and $239M of cash — but the headline earnings are flattered. FY2025 net income of $160M (+209%) sits far above operating income of just $65.8M, and the MD&A makes clear the gap is a one-time gain: the Mavely sale drove both the earnings jump and the cash build (proceeds funded the deleveraging and prepaid taxes). Normalize to the 4.4% operating margin and this is a low-single-digit-margin business, not a 1.6x-P/E steal. The real story is the top line: revenue has fallen every year from $2.70B (FY2021) to $1.49B (FY2025), a 45% erosion, with FY2025 alone down 14.3%. Direct-selling/MLM is in a genuine secular decline and nothing in the filing suggests a floor.

What keeps this a hold rather than a sell is the balance sheet and cash generation. Management paid down $170M of net debt in 2025 ($135M term loan + $35M revolver), cutting long-term debt 43.8% to $204M and leaving liabilities/equity at a comfortable 0.75x, well inside the 2.75x leverage covenant. Gross margin remains high at 69.4%, the company still threw off $80.3M of operating cash (funding $34.3M capex, $20M buybacks and $11.8M of dividends), and even in a down year FCF of ~$46M is a ~19% yield on the market cap. A lot of pessimism is already priced in.