Herbalife Ltd. (NYSE:HLF) will release its quarterly report on Monday and, as the subject of attention from some of the most influential investors in the market, the company can expect fireworks to ensue. In the midst of such a public battle between bullish and bearish investors, it’s easy to lose sight of company fundamentals, but Herbalife earnings might help make the case clearer for one side over the other.
Herbalife Ltd. (NYSE:HLF) has faced serious accusations lately, with hedge-fund manager Bill Ackman referring to the company’s business model as a pyramid scheme. Yet, equally prominent investor Carl Icahn has taken the opposite side of Ackman’s short trade, buying up a big stake in the company, and making moves to put two representatives on the Herbalife board. Meanwhile, though, the company is still in business to make money, and must keep operating despite the controversies. Let’s take an early look at what’s been happening with Herbalife over the past quarter, and what we’re likely to see in its quarterly report.
Stats on Herbalife
|Analyst EPS Estimate||$1.18|
|Change From Year-Ago EPS||7.3%|
|Revenue Estimate||$1.16 billion|
|Change From Year-Ago Revenue||12.4%|
|Earnings Beats in Past 4 Quarters||4|
Source: Yahoo! Finance.
How fast can Herbalife earnings grow?
Analysts have had mixed views about Herbalife Ltd. (NYSE:HLF) earnings recently, pulling back on their estimates for the June quarter by $0.08 per share, but boosting their projections for the full 2013 and 2014 years. The stock, though, has been unequivocal in its upward movement, climbing 60% just since late April.
Herbalife started out the quarter well for Icahn and other bullish investors, reporting first-quarter financial results that featured a 17% jump in revenue, and earnings per share that jumped 20%. The company also gave favorable guidance, with expectations of 13% to 15% sales growth producing $4.60 to $4.80 in earnings per share for the full 2013 year.
Fundamentally, the company is in the middle of an industry that’s gaining in importance, as people pay more attention to the obesity epidemic. Weight-specialists Weight Watchers International, Inc. (NYSE:WTW) and NutriSystem Inc. (NASDAQ:NTRI) come at the industry from a slightly different angle, with more specialization on weight specifically, without the diverse personal-care and other products that Herbalife Ltd. (NYSE:HLF) offers, and they’ve faced some challenges in producing growth. GNC Holdings Inc (NYSE:GNC), which is arguably a more direct competitor that resembles Herbalife more closely, reported earnings earlier today that rose by 18% from the previous year, sending its stock up nearly 11% in today’s trading.
Herbalife recently made a deal with sports and entertainment company AEG Worldwide expanding its existing relationship under which Herbalife Ltd. (NYSE:HLF) sponsors the shirts of the LA Galaxy major-league soccer team. The new deal adds Sweden’s Hammarby team to the mix, with the hopes of boosting Herbalife’s international exposure.