Herbalife Nutrition Ltd. develops and sells nutrition solutions in North America, Mexico, South and Central America, Europe, the Middle East, Africa, and the Asia Pacific.
The last earnings update was 26 days ago.
Discounted Cash Flow Calculation for DB:HOO using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
DB:HOO DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Herbalife Nutrition's share price is below the future cash flow value, and at a moderate discount (> 20%).
Herbalife Nutrition's share price is below the future cash flow value, but not at a substantial discount (< 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Herbalife Nutrition's earnings available for a low price, and how does
this compare to other companies in the same industry?
Herbalife Nutrition's earnings are expected to grow significantly at over 20% yearly.
Herbalife Nutrition's revenue is expected to grow by 5.4% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Herbalife Nutrition's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
4/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
A company's financial position is much like your own financial position,
it includes everything you own
The boxes below represent the relative size of what makes up
Herbalife Nutrition's finances.
The net worth of a company is the difference between its assets and liabilities.
Herbalife Nutrition is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
Herbalife Nutrition's long term commitments exceed its cash and other short term assets.
This treemap shows a more detailed breakdown of
Herbalife Nutrition's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
High level of physical assets or inventory.
Herbalife Nutrition has negative shareholder equity (liabilities exceed assets) therefore debt is not covered by short term assets.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Michael O. Johnson has been the Chairman of Herbalife Nutrition Ltd. since June 1, 2017 and serves as its Chief Executive Officer since January 2019. He served as an Interim Chief Executive Officer at Herbalife Nutrition Ltd. since January 8, 2019 until January 2019. He served as its Chief Executive Officer since April 2003 until May 2017. Mr. Johnson has been the Chief Executive Officer of Herbalife International, Inc. since April 2003. He has been the Executive Chairman of Herbalife International of America, Inc. since 2007. He serves as the Chief Executive Officer of WH Intermediate Holdings Ltd., holding company of Herbalife Ltd. He served as the President of Walt Disney International. He served as Chief Executive Officer of Herbalife International of America, Inc. since 2003 until June 1, 2017. He served as the President of Asia Pacific for Walt Disney Company and President of Buena Vista Home Entertainment. He devised and launched Disney's “Disney I“ subscription entertainment business. He served as a Publisher of Audio Times magazine and as a Marketing Executive for Warner Amex Satellite Entertainment Company. He directed the regional sales efforts of Warner Amex Satellite Entertainment Company for three of its television channels, including MTV, Nickelodeon and The Movie Channel. He joined Herbalife in April 2003, after 17 years at Walt Disney Corporation where, he headed Univision Communications Inc. Worldwide Video Group, restructuring its video business model and market presence. Mr. Johnson served as the Chairman of Herbalife Ltd. since May 2007 until June 1, 2017. He has been a Director of Herbalife Ltd. and Director of WH Intermediate Holdings LTD., the wholly owned subsidiary of Herbalife Ltd., since 2003. He served as Independent Director of Univision Communications Inc. from June 6, 2005 to 2007. He serves as a Director of Herbalife International, Inc. He received his Bachelor of Arts in Political Science from Western State University.
Michael's compensation has been consistent with company performance over the past year.
Michael's remuneration is higher than average for companies of similar size in Germany.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the Herbalife Nutrition management team is less than 2 years, this suggests a new team.
Co-President & Chief Strategic Officer
Co-President and Chief Health & Nutrition Officer
Executive VP & CFO
COO & Chief of Staff
Chairman & CEO
Chief Information Officer
Director of Investor Relations
Chief Legal Officer
Chief Compliance Officer
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The tenure for the Herbalife Nutrition board of directors is about average.
Board of Directors
VP of Worldwide Nutrition Training & Member of Nutrition Advisory Board
Herbalife Nutrition Ltd. develops and sells nutrition solutions in North America, Mexico, South and Central America, Europe, the Middle East, Africa, and the Asia Pacific. It provides science-based products in the areas of weight management; targeted nutrition; energy, sports, and fitness; and outer nutrition. The company offers weight management products, including meal replacement products, protein shakes, drink mixes, weight loss enhancers, and healthy snacks; targeted nutrition products comprising dietary and nutritional supplements that contain herbs, vitamins, minerals, and other natural ingredients; outer nutrition products consisting of facial skin, body, and hair care products; and energy, sports, and fitness products, such as N-R-G tea and energy drink products. It also provides literature, promotional, and other materials, including start-up kits, sales tools, and educational materials. The company offers its products through own retail stores, as well as through independent service providers, sales representatives, and sales officers. The company was formerly known as Herbalife Ltd. and changed its name to Herbalife Nutrition Ltd. in April 2018. Herbalife Nutrition Ltd. was founded in 1980 and is headquartered in Los Angeles, California.
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