HLF Stock Overview
Herbalife Nutrition Ltd. offers nutrition solutions in North America, Mexico, South and Central America, Europe, the Middle East, Africa, China, and rest of Asia Pacific.
Herbalife Nutrition Competitors
Price History & Performance
|Historical stock prices|
|Current Share Price||US$27.78|
|52 Week High||US$54.45|
|52 Week Low||US$19.30|
|1 Month Change||30.36%|
|3 Month Change||13.81%|
|1 Year Change||-42.02%|
|3 Year Change||-26.74%|
|5 Year Change||-15.67%|
|Change since IPO||654.89%|
Recent News & Updates
Herbalife Non-GAAP EPS of $0.96 beats by $0.33, revenue of $1.39B beats by $80M
Herbalife press release (NYSE:HLF): Q2 Non-GAAP EPS of $0.96 beats by $0.33. Revenue of $1.39B (-10.3% Y/Y) beats by $80M. On a constant currency basis, net sales declined 5.9% compared to the prior year period. Second quarter 2022 reported net income of $86.5 million and adjusted EBITDA of $195.4 million. During the second quarter, the Company repurchased approximately 1.1 million shares for a total purchase price of $30.2 million. Reaffirming full year 2022 guidance for net sales and adjusted EBITDA. Lowering adjusted diluted full year 2022 EPS guidance, primarily due to unfavorable currency movement. Shares +4.21%.
Herbalife: A Challenging Future Awaits
Herbalife Nutrition is a company that creates and sells dietary supplements. It deploys a MLM business model which was an important factor for the upward momentum during the covid-pandemic. However, I believe that the same model is what could potentially bring the company into trouble now and in the near future. Furthermore, in my opinion, its overall reputation is rather controversial and negative. Despite its very low valuation, the company is a sell for me right now. Investment Thesis Herbalife Nutrition Ltd. (HLF) deploys a MLM business model which was most likely the main reason for the upward momentum during the covid-pandemic. However, I believe that the same model is what could bring the company into trouble now and in the near future. Despite its very low valuation, the company is a sell for me right now. Introducing Herbalife Nutrition Herbalife Nutrition is a global multi-level marketing ((MLM)) company that creates and sells dietary supplements. Weight-loss and protein shakes are among Herbalife Nutrition's products, as are protein bars, teas, aloes, vitamins, and sports hydration, energy, and personal care products. The Formula 1 protein shake, a soy-based meal replacement shake, is the company's original product. Data by YCharts The company had its ups and downs as it was both caught in controversies as well as had its sales successes. The FTC (Federal Trade Commission) started an investigation into Herbalife as consumers and members in both houses of Congress accused the consumers of the company were duped into believing they might earn a huge income from the business opportunity or large sums of money through retail sales of the company's items. In a settlement with the FTC in July 2016, Herbalife agreed to modify its business model and pay $200 million. Furthermore, certain reports are shared around the internet which conclude that many consumers who use their products get liver injuries. On the other hand, its MLM-model seemed to attract new customers while dietary supplements gain in popularity. The stock lost 60% of its value in the last 12 months. Relating to Herbalife Nutrition, in this article I will analyze: Its historical performance Factors limiting its future potential Valuation Potential factors resulting in a upward price movement My overall take on Herbalife Nutrition Historical Performance Growth (Year-over-year) Dec-19 Dec-20 Dec-21 Last 4 quarters Revenue (0.30%) 13.63% 4.71% -5.84% Gross profit -5.28% 9.32% 1.06% -8.53% Net income 4.86% 19.81% 20.02% -20.95% Source: Seeking Alpha Margins (% of revenue) Dec-19 Dec-20 Dec-21 Last 4 quarters Gross Profit 50.66% 48.74% 47.04% 46.33% Net income 6.38% 6.72% 7.71% 7.06% Free cash flow 5.09% 7.96% 3.80% 4.73% Source: Seeking Alpha The last few years have shown mixed results, with especially losing a decent amount of revenue in the last 4 quarters compared to the 4 quarters prior. Gross profit declined even more. It seemed that the COVID-pandemic actually benefitted the company, but is now struggling as the pandemic effects are wearing off. In the Q1 2022 earnings call, management mainly attributes the loss in sales to: Economic pressures from the inflationary environment and widespread geopolitical uncertainty has had an impact on our channel However, when we look at BellRing Brands (NYSE: BRBR), another player in the nutrition market, they seem to have no issue with dropping sales numbers. On the contrary, they have been growing at an excellent rate. So inflation most likely isn't the only reason. MLM Business Model I think that this rise and fall in sales can potentially be attributed to the business model used. Let me explain. At the beginning of the article, I stated that Herbalife Nutrition deploys a multi-marketing scheme business model. For the ones that don't know, multi-level marketing ((MLM)) is a marketing strategy for the sale of goods or services in which the MLM company's revenue is derived from a non-salaried workforce selling the company's goods or services and the participants' earnings are derived from a pyramid-shaped or binary compensation commission system. The compensation plan in multi-level marketing typically pays out to members from two possible revenue sources. The first is based on a sales commission from directly selling the product or service; the second is based on commissions from wholesale purchases made by other sellers whom the participant has recruited to sell merchandise as well. Something that comes to light when studying the latest three annual statement of the company is the significant increase in their so called "distributors", people that wish to resell products or build a sales organization. According to these annual statements, the company had 1 million distributors at the end of 2019, 1.5 million at end of 2020 and 2.3 million at the end of 2021. I believe that a potential cause for this extreme increase in distributors can be attributed to the COVID pandemic. Lots of people lost their jobs with decreased income and a lot free time at their hands as result. Possibly because of this, new distributors could have been attracted quite easily to the MLM system of Herbalife with promises to make decent money. The first result of having more sellers, is that it increases total sales efforts and thus more acquired customers. Furthermore, the new sellers will have to buy the products and certain marketing related sources, which increases the revenue for Herbalife directly. I believe that this could have resulted in the boost that is seen during the COVID-pandemic. While these effects sound great, the MLM model is perceived to have disadvantages as well. This business model has been perceived to be controversial as it most often leads to people actually losing money over it and using manipulative sales tactics. Furthermore, there are often high initial entry costs (for marketing kit and first products) and an emphasis on recruitment of others over actual sales. While a lot of newcomers were promised great results during the COVID-pandemic when they needed it the most, they might end up with disappointment due to not making money. Not only could these sellers potentially become inactive, not attracting new sellers would mean less starter kit revenue. Based on these arguments, I believe that it will be difficult for Herbalife to sustain the sales level that it has achieves in the last 2 years. Mixed Reviews on the products When using Reddit to estimate the overall sentiment for the products, it can be concluded that people are quite negative about the brand (source 1, source 2). Arguments mentioned by people are the reports on potential liver injuries, that I mentioned before. Furthermore, most people mention the MLM model as a reason that they don't buy its products. Other Reddit users say it's expensive compared to making your own shakes. A doctor reviewed the product and recommended avoiding Herbalife.
|HLF||US Personal Products||US Market|
Return vs Industry: HLF underperformed the US Personal Products industry which returned -20.9% over the past year.
Return vs Market: HLF underperformed the US Market which returned -12.8% over the past year.
|HLF Average Weekly Movement||9.2%|
|Personal Products Industry Average Movement||10.7%|
|Market Average Movement||7.9%|
|10% most volatile stocks in US Market||17.1%|
|10% least volatile stocks in US Market||3.2%|
Stable Share Price: HLF is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 9% a week.
Volatility Over Time: HLF's weekly volatility (9%) has been stable over the past year.
About the Company
Herbalife Nutrition Ltd. offers nutrition solutions in North America, Mexico, South and Central America, Europe, the Middle East, Africa, China, and rest of Asia Pacific. The company provides products in the areas of weight management; targeted nutrition; energy, sports, and fitness; and outer nutrition. It offers weight management products, including meal replacement products, protein shakes, drink mixes, weight loss enhancers, and healthy snacks; targeted nutrition products, which comprise functional beverages, and dietary and nutritional supplements that contain herbs, vitamins, minerals, and other natural ingredients; outer nutrition products, such as facial skin, body, and hair care products; and energy, sports, and fitness products, including N-R-G tea and energy drink products.
Herbalife Nutrition Fundamentals Summary
|HLF fundamental statistics|
Is HLF overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|HLF income statement (TTM)|
|Cost of Revenue||US$2.99b|
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
|Earnings per share (EPS)||3.48|
|Net Profit Margin||6.21%|
How did HLF perform over the long term?See historical performance and comparison
Is HLF undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score 5/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Key Valuation Metric
Which metric is best to use when looking at relative valuation for HLF?
Other financial metrics that can be useful for relative valuation.
|What is HLF's n/a Ratio?|
Price to Earnings Ratio vs Peers
How does HLF's PE Ratio compare to its peers?
|HLF PE Ratio vs Peers|
|Company||PE||Estimated Growth||Market Cap|
IPAR Inter Parfums
NUS Nu Skin Enterprises
EPC Edgewell Personal Care
BRBR BellRing Brands
HLF Herbalife Nutrition
Price-To-Earnings vs Peers: HLF is good value based on its Price-To-Earnings Ratio (8x) compared to the peer average (34.4x).
Price to Earnings Ratio vs Industry
How does HLF's PE Ratio compare vs other companies in the US Personal Products Industry?
Price-To-Earnings vs Industry: HLF is good value based on its Price-To-Earnings Ratio (8x) compared to the US Personal Products industry average (16.7x)
Price to Earnings Ratio vs Fair Ratio
What is HLF's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
|Current PE Ratio||8x|
|Fair PE Ratio||23.6x|
Price-To-Earnings vs Fair Ratio: HLF is good value based on its Price-To-Earnings Ratio (8x) compared to the estimated Fair Price-To-Earnings Ratio (23.6x).
Share Price vs Fair Value
What is the Fair Price of HLF when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: HLF ($27.78) is trading below our estimate of fair value ($28.79)
Significantly Below Fair Value: HLF is trading below fair value, but not by a significant amount.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.
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How is Herbalife Nutrition forecast to perform in the next 1 to 3 years based on estimates from 3 analysts?
Future Growth Score1/6
Future Growth Score 1/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: HLF's forecast earnings growth (8.4% per year) is above the savings rate (1.9%).
Earnings vs Market: HLF's earnings (8.4% per year) are forecast to grow slower than the US market (12.8% per year).
High Growth Earnings: HLF's earnings are forecast to grow, but not significantly.
Revenue vs Market: HLF's revenue (1.6% per year) is forecast to grow slower than the US market (7.9% per year).
High Growth Revenue: HLF's revenue (1.6% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: Insufficient data to determine if HLF's Return on Equity is forecast to be high in 3 years time
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How has Herbalife Nutrition performed over the past 5 years?
Past Performance Score2/6
Past Performance Score 2/6
Growing Profit Margin
Earnings vs Industry
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: HLF has high quality earnings.
Growing Profit Margin: HLF's current net profit margins (6.2%) are lower than last year (8.4%).
Past Earnings Growth Analysis
Earnings Trend: HLF's earnings have grown by 11.1% per year over the past 5 years.
Accelerating Growth: HLF's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.
Earnings vs Industry: HLF had negative earnings growth (-32.4%) over the past year, making it difficult to compare to the Personal Products industry average (18.7%).
Return on Equity
High ROE: HLF's liabilities exceed its assets, so it is difficult to calculate its Return on Equity.
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How is Herbalife Nutrition's financial position?
Financial Health Score1/6
Financial Health Score 1/6
Short Term Liabilities
Long Term Liabilities
Financial Position Analysis
Short Term Liabilities: HLF has negative shareholder equity, which is a more serious situation than short term assets not covering short term liabilities.
Long Term Liabilities: HLF has negative shareholder equity, which is a more serious situation than short term assets not covering long term liabilities.
Debt to Equity History and Analysis
Debt Level: HLF has negative shareholder equity, which is a more serious situation than a high debt level.
Reducing Debt: HLF's has negative shareholder equity, so we do not need to check if its debt has reduced over time.
Debt Coverage: HLF's debt is not well covered by operating cash flow (14.3%).
Interest Coverage: HLF's interest payments on its debt are well covered by EBIT (4.4x coverage).
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What is Herbalife Nutrition current dividend yield, its reliability and sustainability?
Dividend Score 0/6
Cash Flow Coverage
Dividend Yield vs Market
Notable Dividend: Unable to evaluate HLF's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.
High Dividend: Unable to evaluate HLF's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.
Stability and Growth of Payments
Stable Dividend: Insufficient data to determine if HLF's dividends per share have been stable in the past.
Growing Dividend: Insufficient data to determine if HLF's dividend payments have been increasing.
Earnings Payout to Shareholders
Earnings Coverage: HLF is not paying a notable dividend for the US market.
Cash Payout to Shareholders
Cash Flow Coverage: Unable to calculate sustainability of dividends as HLF has not reported any payouts.
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How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
John Agwunobi (57 yo)
Dr. John O. Agwunobi, M.D., M.B.A., M.P.H., serves as Chief Executive Officer at Herbalife Nutrition Ltd. since March 30, 2020 and its Chairman of the Board for April 29, 2020. Dr. Agwunobi served as Chief...
CEO Compensation Analysis
Compensation vs Market: John's total compensation ($USD7.00M) is about average for companies of similar size in the US market ($USD6.58M).
Compensation vs Earnings: John's compensation has been consistent with company performance over the past year.
Experienced Management: HLF's management team is considered experienced (2.6 years average tenure).
Experienced Board: HLF's board of directors are considered experienced (3.3 years average tenure).
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: HLF insiders have bought more shares than they have sold in the past 3 months.
Recent Insider Transactions
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
Herbalife Nutrition Ltd.'s employee growth, exchange listings and data sources
- Name: Herbalife Nutrition Ltd.
- Ticker: HLF
- Exchange: NYSE
- Founded: 1980
- Industry: Personal Products
- Sector: Household
- Implied Market Cap: US$2.719b
- Shares outstanding: 97.86m
- Website: https://www.herbalife.com
Number of Employees
- Herbalife Nutrition Ltd.
- PO Box 80210
- Los Angeles
- United States
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2022/08/06 00:00|
|End of Day Share Price||2022/08/05 00:00|
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.