Herbalife Limited - Momentum
19 März 2012 - 1:00AM
Zacks
HLF 031612
Herbalife Limited (HLF)
It’s hard to deny
that we are becoming a much more informed society in general.
The internet alone has broadened the knowledge (and curiosity) of
millions of people around the world.
Fitness, medicine
and wellness in general are hot topics on the web. Many folks
visit sites like WebMD, Diagnosispro.com and others to diagnose
their ailments or perhaps just improve their way of life.
While it may not be
possible (or smart) to diagnose a major illness without the help of
a physician; some people find that adding a supplement or two can
help address minor conditions or deficiencies. Here in the
States, it’s becoming more and more common to complement your diet
with vitamins or other supplements.
In fact, 69 percent
of U.S. adults take dietary supplements according to a survey
commissioned by the Council for Responsible Nutrition (CRN), which
is the dietary supplement industry's leading trade association.
The survey also
shows an upward trend in dietary supplement consumption.
Consumer usage is up from 66 percent in 2010, 65 percent in 2009,
and 64 percent in 2008. Our fast moving society and demand
for quick, cheap, nutritional meals is also boosting the “meal
replacement market.” Shakes, protein bars and other high
calorie, vitamin balance snacks are growing fast as well.
Herbalife supplies these nutritional supplements, personal care
and meal replacement options to customers around the world.
According to Herbalife’s reports, volume and profits are on the
rise. Analysts are also putting HLF on their strong buy list
as the company is showing good earnings momentum in a sector that
is heating up.
Company Description &
Earnings Developments
Herbalife Limited is a network marketing company that sells weight
management, nutritional supplement, energy, sports and fitness, and
personal care products in over 75 different states.
In his notes on January 3rd, Todd Bunton noted that Herbalife
delivered record results for Q32011. Earnings per share came in at
87 cents, beating the Zacks Consensus Estimate of 76 cents; a 45%
increase over the same quarter in 2010. Net sales soared 30%
to $895 million and established markets saw volume growth of 20% in
the third quarter, while the emerging markets experienced 27%
volume growth.
In their Q4 on February 23rd, HLF again beat estimates, with
earnings coming in at $0.86 for the quarter. Revenue
increased to $884.6 for the quarter, which was 20% higher than the
same quarter one year prior.
HLF is a mid-cap
(8.23 billion) company that is trading at about 19.5 times forward
(expectations for next quarter) earnings. The health and
wellness company moved back up to a Zacks Rank 1 strong buy on
March 10th, 2011.
HLF earnings
increased from $2.34 in FY2010 to $3.30 in FY2011 (diluted) and
they expected to earn $3.64 in FY2012 according to the Zacks
Consensus Estimate.
Moving Forward
Herbalife has surprised analysts to the upside 4 quarters in a row
at an average of almost 16.50%.
Of the 11
analysts who cover HLF, the consensus is for the company to grow
earnings by 10% in the current year (FY2012) and roughly 13% in
FY2013.
In terms of the magnitude of analyst estimate trends, we are
seeing all of the consensus estimates higher than they were 90 days
ago for the current and next quarter as well as FY2012 and
FY2013.
Next quarter's average analyst estimate for revenue is $875.1
million, with a Zacks Consensus EPS estimate of $0.81.
Market Performance & Technicals
HLF is currently in a bullish trend making higher highs and higher
lows. Look for initial support to come at the $65
level. Below that the 50 and 200 day moving averages of
$61.16 and $56.95 will be key.
HLF has exceeded
the S&P 500’s performance in the past year by a whopping 67%
and outpaced it by over 23% in the past 3 months alone! The
stock remains in a bullish trend and has maintained its momentum in
the past month, leading the index by about 14%. Performance
tends to be correlated to the markets but with a higher volatility
factor.
Jared A Levy is the Momentum Stock Strategist for Zacks.com. He is
also the Editor in charge of the market-beating Zacks Whisper
Trader Service.
HERBALIFE LTD (HLF): Free Stock Analysis Report
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