What Does Herbalife Nutrition Ltd.'s (NYSE:HLF) Share Price Indicate?

While Herbalife Nutrition Ltd. (NYSE:HLF) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the NYSE over the last few months. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Herbalife Nutrition’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Herbalife Nutrition

What's The Opportunity In Herbalife Nutrition?

Great news for investors – Herbalife Nutrition is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $28.41, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Herbalife Nutrition’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Herbalife Nutrition look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Herbalife Nutrition, it is expected to deliver a negative earnings growth of -3.6%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? Although HLF is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to HLF, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on HLF for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 3 warning signs for Herbalife Nutrition you should be mindful of and 2 of them can't be ignored.

If you are no longer interested in Herbalife Nutrition, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.