Equity Research Focusing on the Consumer Sector, Small Cap Consumer Research

Small Cap Consumer Research

Equity Research Focusing on the Consumer Sector

Small Cap Consumer Research, LLC is a leading company-sponsored equity research provider focusing on the consumer sector (apparel, brand licensing and specialty retailing segments).

Equity Bottom-Up

Betterware de Mexico Sab de CV / Equity Bottom-Up

<ul><li>We are reiterating our Buy rating, $22.50 price target and projections for Betterware de Mexico after reviewing the March catalog.</li><li>March completed a 1Q with material YoY positives, from higher SKU counts, rising cadence of new and debuting products, a return of key favorites and continued reductions in overall discounting levels.</li><li>We believe Betterware management has been able to capitalize on the return to normalcy for their supply chain to roll out compelling new items, offer normalized pricing and drive higher levels of orders and, in 1Q, have begun to register increases in the overall levels of Associates and Distributors.</li></ul>

We are reiterating our Buy rating, $22.50 price target and projections for Betterware de Mexico after reviewing the March catalog.March completed a 1Q with material YoY positives, from higher SKU counts, rising cadence of new and debuting products, a return of key favorites and continued reductions in overall discounting levels.We believe Betterware management has been able to capitalize on the return to normalcy for their supply chain to roll out compelling new items, offer normalized pricing and drive higher levels of orders and, in 1Q, have begun to register increases in the overall levels of Associates and Distributors.

BWMX: Snapping the Catalog: 1Q Registered Progress; Reiterate Buy, $22.50 PT

Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>Direct selling as a business model has a large global presence.</li><li>According to the World Federation of Direct Selling Associations (WFDSA), approximately 77% of global direct sales were conducted outside the US in 2022.</li><li>Therefore, foreign currency exchange rates can have a significant impact on reported earnings and cash flows for the dollar-based direct selling platforms, such as NUS, HLF, USNA, and LFVN.</li></ul>

Direct selling as a business model has a large global presence.According to the World Federation of Direct Selling Associations (WFDSA), approximately 77% of global direct sales were conducted outside the US in 2022.Therefore, foreign currency exchange rates can have a significant impact on reported earnings and cash flows for the dollar-based direct selling platforms, such as NUS, HLF, USNA, and LFVN.

Direct Sellers - Currency Outlook Remains Mixed

<ul><li>We are raising our price target for BWMX to $22.50 (from $17) increasing our 2024 top and bottom line projections and rolling out 2025 projections after Betterware de Mexico registered 4Q upside on virtually every level, with the Betterware division returning to YoY top line growth for the first time in eight quarters, and 9.6% YoY revenue growth for JAFRA Mexico with materially better than expected margins.</li><li>The company continued to reduce overall debt levels and raised the dividend rate by 25%, with initial 2024 guidance materially above Street expectations.</li><li>Management also confirmed the coming expansion of Betterware into the United States (in 2Q24) and first signs of a key turn at JAFRA USA. We believe Betterware is once again situated to drive material expansion, and we are increasing our 2023 revenue and EPS projections to Ps.</li></ul>

We are raising our price target for BWMX to $22.50 (from $17) increasing our 2024 top and bottom line projections and rolling out 2025 projections after Betterware de Mexico registered 4Q upside on virtually every level, with the Betterware division returning to YoY top line growth for the first time in eight quarters, and 9.6% YoY revenue growth for JAFRA Mexico with materially better than expected margins.The company continued to reduce overall debt levels and raised the dividend rate by 25%, with initial 2024 guidance materially above Street expectations.Management also confirmed the coming expansion of Betterware into the United States (in 2Q24) and first signs of a key turn at JAFRA USA. We believe Betterware is once again situated to drive material expansion, and we are increasing our 2023 revenue and EPS projections to Ps.

BWMX: Blowout 4Q, Dividend Raise Demonstrates Power of Model; Raising PT & EPS

<ul><li>We are reiterating our Buy rating, $17 price target and projections for Betterware de Mexico after reviewing the February catalog.</li><li>We believe February was a continuation of multiple positive trends which increasingly convince us the division is on a solid path to return to positive top line growth: 1) strong YoY expansion of SKUs; 2) further reductions in overall discounting; and 3) continued new product excitement, from pet's to kids and Spring cleaning, Betterware continues to offer innovative new items.</li><li>Further, as the company continues to streamline non-core categories and offerings, we believe Betterware is increasingly taking share of wallet.</li></ul>

We are reiterating our Buy rating, $17 price target and projections for Betterware de Mexico after reviewing the February catalog.We believe February was a continuation of multiple positive trends which increasingly convince us the division is on a solid path to return to positive top line growth: 1) strong YoY expansion of SKUs; 2) further reductions in overall discounting; and 3) continued new product excitement, from pet's to kids and Spring cleaning, Betterware continues to offer innovative new items.Further, as the company continues to streamline non-core categories and offerings, we believe Betterware is increasingly taking share of wallet.

BWMX: Snapping the Catalog: Moving from Strength to Strength; Reiterate Buy, PT

<ul>
<li>Valuations for direct selling stocks remain at or near historical lows following a very difficult year for the group in 2023.</li>
<li>The 12-month prospective relative P/E ratio for our proprietary Direct Selling Index closed 2023 at a 43% discount to the market, having entered the year at a 35% discount to the market.</li>
<li>This relative multiple contraction was despite a slight improvement in the prospective absolute P/E ratio to 11.2x at the end of 2023, up from 10.9x at the beginning of the year, since the multiple expansion for the S&amp;P 500 was much greater, having expanded nearly 3 full multiple points on the year to close out at approximately 19.7x forward earnings.</li>
</ul>


Valuations for direct selling stocks remain at or near historical lows following a very difficult year for the group in 2023.
The 12-month prospective relative P/E ratio for our proprietary Direct Selling Index closed 2023 at a 43% discount to the market, having entered the year at a 35% discount to the market.
This relative multiple contraction was despite a slight improvement in the prospective absolute P/E ratio to 11.2x at the end of 2023, up from 10.9x at the beginning of the year, since the multiple expansion for the S&amp;P 500 was much greater, having expanded nearly 3 full multiple points on the year to close out at approximately 19.7x forward earnings.


Direct Sellers Valuation Update - Relative Valuations Remain at Generational Lows

United States

Nu Skin Enterprises, Inc. is a global direct selling company.  The Company distributes premium quality personal care products and nutritional supplements. Nu Skin markets its products in the Americas, Europe, and the Asia Pacific region.  The Company provides marketing and distribution of technology-based products through Big Planet, Inc.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Nu Skin Enterprises Inc A (NUS US)

BWMX: Snapping the Catalog: 1Q Registered Progress; Reiterate Buy, $22.50 PT

We are reiterating our Buy rating, $22.50 price target and projections for Betterware de Mexico after reviewing the March catalog. March completed...

Small Cap Consumer Research

Direct Sellers - Currency Outlook Remains Mixed

According to the World Federation of Direct Selling Associations (WFDSA), approximately 77% of global direct sales were conducted outside the US in...

Water Tower Research

BWMX: Blowout 4Q, Dividend Raise Demonstrates Power of Model; Raising PT & EPS

We are raising our price target for BWMX to $22.50 (from $17) increasing our 2024 top and bottom line projections and rolling out 2025 projections...

Small Cap Consumer Research

BWMX: Snapping the Catalog: Moving from Strength to Strength; Reiterate Buy, PT

We are reiterating our Buy rating, $17 price target and projections for Betterware de Mexico after reviewing the February catalog. We believe...

Small Cap Consumer Research

Direct Sellers Valuation Update - Relative Valuations Remain at Generational Lows

The 12-month prospective relative P/E ratio for our proprietary Direct Selling Index closed 2023 at a 43% discount to the market, having entered...

Water Tower Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)