| Stock (Symbol) | Stock Price | |
Herbalife (HLF) |
$51 |
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| Data is as of | Expected to Report | Sector |
December 14, 2011 |
Feb 20 |
Food & Necessities |
| Sharek’s Take | ||
 Herbalife’s management underpromised for 2012. The company is usually conservative in guidance, then beats the street, so this is not that big of a concern. I did look at least year’s research report and guidance looked better. HLF is loosing a bit of momentum, but I’m not concerned.On the bright side, HLF’s P/E has fallen from 19 last quarter to 14 today — so upside for next year is solid. Herbalife sells its products through an Independent Distributor model, which makes it easy to own a business in underdeveloped nations because of the solid international business model. |
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| One-Year Chart | ||
 In the one-year chart we see HLF has been building a base since the stock popped in June. HLF had been on a tear from $10 to $55 from May 2009 through May 2011 (just over two years) so it needed a break.Estimates for the next two quarters are low, and I expect HLF to beat, but the company may not get the 40% profit growth we’ve been accustomed too. |
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| Earnings Table | ||
 Sales were up 30%, 28%, 29% and 17% the prior four quarters. Profit growth has been over 40% for the second straight quarter (when sales growth took off).HLF’s been lights out when it comes to beating the street. The company ups and beats. This is one of the reasons this is one of the 20 best stocks in the market.Annual Profit Estimates came down on conservative guidance. 2011 revenue growth will likely be around 25%, but estimates for 2012 revenue are only 10%. Growth could be slowing. Quarterly estimates almost always show slowing growth ahead. Quarterly estimates declined this quarter. Momentum has slowed. |
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| Fair Value | ||
 What’s nice is the 14 P/E gives HLF good upside for 2012. I continue to believe this stock is worth 20 times earnings — at least. |
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| Ten-Year Chart | ||
 Herbalife’s ten-year chart was extended earlier in the year. Now the stock has built a nice base. Since 2004 profits have grown from $0.35 to $3.17 — almost ten-fold. You have to give the company the benefit of the doubt and assume revenue growth will be higher than 10% next year. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
7 of 20 |
It looks like Herbalife’s growth will slow a bit, but until it actually does (i.e. revenue growth of 10%) I have to give the company the benefit of the doubt and assume this is still a 20% profit grower. |
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Aggressive Growth Portfolio
7 of 10 |
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