Wrapping up Q2 earnings, we look at the numbers and key takeaways for the personal care stocks, including Medifast (NYSE:MED) and its peers.
While personal care products products may seem more discretionary than food, consumers tend to maintain or even boost their spending on the category during tough times. This phenomenon is known as "the lipstick effect" by economists, which states that consumers still want some semblance of affordable luxuries like beauty and wellness when the economy is sputtering.
Consumer tastes are constantly changing, and personal care companies are currently responding to the public’s increased desire for ethically produced goods by featuring natural ingredients in their products.
The 13 personal care stocks we track reported a slower Q2. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 14.6% below.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility, and personal care stocks have had a rough stretch. On average, share prices are down 10.4% since the latest earnings results.
Medifast (NYSE:MED) Known for its Optavia program that combines portion-controlled meal replacements with coaching, Medifast (NYSE:MED) has a broad product portfolio of bars, snacks, drinks, and desserts for those looking to lose weight or consume healthier foods.
Medifast reported revenues of $168.6 million, down 43.1% year on year. This print fell short of analysts’ expectations by 3.2%. Overall, it was a slower quarter for the company with revenue guidance for next quarter missing analysts’ expectations and a miss of analysts’ earnings estimates.
“We are acting decisively to transform our business to position us for long-term growth, with a strong balance sheet free of debt, a clear focus on new customer acquisition, and a broader health and wellness offer to a significantly expanded target market,” said Dan Chard, Chairman & CEO.
Medifast delivered the slowest revenue growth of the whole group. Unsurprisingly, the stock is down 11.3% since reporting and currently trades at $18.59.
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Best Q2: The Honest Company (NASDAQ:HNST) Co-founded by actress Jessica Alba, The Honest Company (NASDAQ:HNST) sells diapers and wipes, skin care products, and household cleaning products.
The Honest Company reported revenues of $93.05 million, up 10.1% year on year, outperforming analysts’ expectations by 6.8%. The business had an exceptional quarter with an impressive beat of analysts’ earnings estimates.
The Honest Company achieved the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 27.9% since reporting. It currently trades at $4.15.
Weakest Q2: BeautyHealth (NASDAQ:SKIN) Operating in the emerging beauty health category, the appropriately named BeautyHealth (NASDAQ:SKIN) is a skincare company best known for its Hydrafacial product that cleanses and hydrates skin.
BeautyHealth reported revenues of $90.6 million, down 22.9% year on year, falling short of analysts’ expectations by 8.1%. It was a disappointing quarter as it posted revenue guidance for next quarter missing analysts’ expectations.
BeautyHealth delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. Interestingly, the stock is up 7.8% since the results and currently trades at $1.39.
e.l.f. (NYSE:ELF) e.l.f. Beauty (NYSE:NYSE:ELF), which stands for ‘eyes, lips, face’, offers high-quality beauty products at accessible price points.
e.l.f. reported revenues of $324.5 million, up 50% year on year. This result surpassed analysts’ expectations by 6.6%. Overall, it was a strong quarter as it also produced an impressive beat of analysts’ earnings estimates and a decent beat of analysts’ operating margin estimates.
e.l.f. delivered the fastest revenue growth among its peers. The stock is down 41.4% since reporting and currently trades at $110.12.
Nu Skin (NYSE:NYSE:NUS) With person-to-person marketing and sales rather than selling through retail stores, Nu Skin (NYSE:NUS) is a personal care and dietary supplements company that engages in direct selling.
Nu Skin reported revenues of $439.1 million, down 12.2% year on year. This print surpassed analysts’ expectations by 1.7%. Taking a step back, it was a slower quarter as it recorded underwhelming earnings guidance for the next quarter and a miss of analysts’ gross margin estimates.
Nu Skin scored the highest full-year guidance raise among its peers. The stock is down 31.9% since reporting and currently trades at $7.06.
This content was originally published on Stock Story
