| Stock (Symbol) | Stock Price | |
Herbalife (HLF) |
$46 |
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| Data is as of | Expected to Report | Sector |
May 9, 2012 |
Aug 1 |
Food & Necessities |
| Sharek’s Take | ||
 Herbalife got hammered after David Einhorn questioned HLF’s sales breakdown (i.e, how much sales from self consumers, small retailers and potential sales leaders). The story can be read here. Herbalife has a new CFO who stated he didn’t think the numbers didn’t need to be reported. Still, HLF shares dropped on heavy volume because Einhorn is a hedge fund manager who has shorted stocks successfully in the past. HLF’s business model was questioned in 2007 too, and the SEC exonerated the company.In the end HLF shares have dropped from $66 last quarter to $46 this quarter. Now Herbalife has a yield of 2.6% and a P/E of 12. The company is worth a little more than $5 billion and has agreed to repurchase more than $425 million of its own shares by July. The swift drop in the stock’s price has taken HLF from being fairly valued to undervalued. |
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| One-Year Chart | ||
 First I would like to state HLF has been a winner for me. I originally bought the stock when the P/E was 12. Last quarter the P/E was 18 and the stock was within 10% of being fairly valued — and I was taking profits. Now HLF’s P/E is 12 again. Still, time is needed for the stock to regain momentum. |
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| Earnings Table | ||
 Sales growth was 21% LastQtr, up from 19% 2QtrsAgo. Profit growth has slowed the past three quarters from 47%, to 30%, and now 22%.HLF beat by 8 cents last quarter, but had beat by 13 cents in each of the prevuous three quarters — so both profit growth and beat-the-street momentum has slowed. Annual Profit Estimates did jump this quarter, and the share buyback program will help EPS rise. Quarterly estimates usually show red, and they do now. HLF usually beats. |
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| Fair Value | ||
 I took HLF’s Fair Value P/E from 20 to 17. The stock looks to have huge upside. |
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| Ten-Year Chart | ||
 The ten-year chart is now a wreck after the recent stock colapse. That stinks. HLF didn’t even find support at the $55 base built in 2011. I’m also disapointed profits are expected to climb only 14% this year. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
16 of 18 |
We don’t know if Einhorn was short HLF, or looking to short it, or owned the stock. Without private detective research I have to stick to the numbers. HLF is selling for 12 times earnings, pays a yeild of around 2.5% and is buying back shares. The stock seems to have huge upside. |
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Aggressive Growth Portfolio
7 of 8 |
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