Billionaire Carl Icahn Buying More Herbalife

Herbalife is something of a unique situation but we can compare it to other companies in a similar business or with a similar “multi-level marketing” business model. Nu Skin Enterprises, Inc. (NYSE:NUS) and Avon Products, Inc. (NYSE:AVP) are more focused on beauty products. Avon trades at 16 times consensus earnings for 2014, and revenue has been declining slightly; there’s fairly low short interest in the stock. Nu Skin had revenue and net income growth close to 20% in the fourth quarter of 2012 versus a year earlier, but the stock is down 27% in the last year and 20% of the outstanding shares are held short. It currently carries a trailing P/E of 12, a slight premium to Herbalife though its growth story has been better.

NutriSystem Inc. (NASDAQ:NTRI) has been struggling with profitability, and though Wall Street analysts project somewhat stable earnings next year sales have been falling and we would avoid the stock. Weight Watchers International, Inc. (NYSE:WTW) has fallen 50% in the last year, and it is now valued at 10 times earnings on both a trailing and a forward basis. That is a cheap multiple, and even though financial performance has been mixed we’d note that places the company at about the same pricing as Herbalife. As a result it may be of more interest to investors who haven’t been persuaded by Ackman but do have concerns about the longer-term viability of that company.

Disclosure: I own no shares of any stocks mentioned in this article.