When I look at Herbalife’s Earnings Table, what stands out to me the most is quarterly estimates. Profit growth is expected to slow to 11%, 7%, 6% and 4% the next four quarters.
On the bright side, HLF has been delivering excellent profit growth this year by beating estimates. The company has beaten the street by an average of 24 cents during the last four quarters.
One Year Chart
Here’s the wild ride HLF stock has been on during the last year. Check out the profit growth and Estimates along the bottom. Seems like growth is slowing but who knows, as Herbalife could put up 20% profit growth next year. For 11 times earnings the stock is reasonable, but this stock hasn’t had a median P/E over 14 since 2006, when it was 17.
Fair Value
I feel HLF is worth 12 times earnings, there’s not much upside to my Fair Value right now. I should probably take my P/E to 14 next quarter if the company beats the street.
Sharek’s Take
It’s all about beating the street. If Herbalife beats the street and raises estimates the stock will probably continue higher. If not HLF could go through a basing period for around six months. Still, at 11 times earnings this stock is a pretty good bargain.
View the Earnings Table here. View the Profit History here.View the Ten Year Chart here.
