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HLF

Herbalife Nutrition NYSE:HLF Stock Report

Last Price

US$27.78

Market Cap

US$2.7b

7D

13.8%

1Y

-42.0%

Updated

06 Aug, 2022

Data

Company Financials +
HLF fundamental analysis
Snowflake Score
Valuation5/6
Future Growth1/6
Past Performance2/6
Financial Health1/6
Dividends0/6

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

Summary of all time highs, changes and price drops for Herbalife Nutrition
Historical stock prices
Current Share PriceUS$27.78
52 Week HighUS$54.45
52 Week LowUS$19.30
Beta1.12
1 Month Change30.36%
3 Month Change13.81%
1 Year Change-42.02%
3 Year Change-26.74%
5 Year Change-15.67%
Change since IPO654.89%

Recent News & Updates

Aug 02

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%.

Jul 13

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.

Shareholder Returns

HLFUS Personal ProductsUS Market
7D13.8%-0.7%1.0%
1Y-42.0%-20.9%-12.9%

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.

Price Volatility

Is HLF's price volatile compared to industry and market?
HLF volatility
HLF Average Weekly Movement9.2%
Personal Products Industry Average Movement10.7%
Market Average Movement7.9%
10% most volatile stocks in US Market17.1%
10% least volatile stocks in US Market3.2%

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

FoundedEmployeesCEOWebsite
198010,800John Agwunobihttps://www.herbalife.com

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

How do Herbalife Nutrition's earnings and revenue compare to its market cap?
HLF fundamental statistics
Market CapUS$2.72b
Earnings (TTM)US$340.30m
Revenue (TTM)US$5.48b

8.0x

P/E Ratio

0.5x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
HLF income statement (TTM)
RevenueUS$5.48b
Cost of RevenueUS$2.99b
Gross ProfitUS$2.49b
Other ExpensesUS$2.15b
EarningsUS$340.30m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)3.48
Gross Margin45.50%
Net Profit Margin6.21%
Debt/Equity Ratio-198.5%

How did HLF perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is HLF undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

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

  • Analyst Forecast

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.

HLF key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue0.9x
Enterprise Value/EBITDA7.3x
PEG Ratio1x

Price to Earnings Ratio vs Peers

How does HLF's PE Ratio compare to its peers?

HLF PE Ratio vs Peers
The above table shows the PE ratio for HLF vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average34.4x
IPAR Inter Parfums
28.6x7.8%US$2.7b
NUS Nu Skin Enterprises
19.3x15.4%US$2.2b
EPC Edgewell Personal Care
19.5x12.9%US$2.1b
BRBR BellRing Brands
58.4x40.7%US$3.4b
HLF Herbalife Nutrition
8x8.4%US$2.7b

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.

HLF PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio8x
Fair PE Ratio23.6x

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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Future Growth

How is Herbalife Nutrition forecast to perform in the next 1 to 3 years based on estimates from 3 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


8.4%

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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Past Performance

How has Herbalife Nutrition performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


11.1%

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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Financial Health

How is Herbalife Nutrition's financial position?

Financial Health Score

1/6

Financial Health Score 1/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

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).


Balance Sheet


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Dividend

What is Herbalife Nutrition current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • 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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Management

How experienced are the management team and are they aligned to shareholders interests?

2.6yrs

Average management tenure


CEO

John Agwunobi (57 yo)

2.42yrs

Tenure

US$6,996,699

Compensation

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.


Leadership Team

Experienced Management: HLF's management team is considered experienced (2.6 years average tenure).


Board Members

Experienced Board: HLF's board of directors are considered experienced (3.3 years average tenure).


Ownership

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

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Herbalife Nutrition Ltd.'s employee growth, exchange listings and data sources


Key Information

  • 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


Location

  • Herbalife Nutrition Ltd.
  • PO Box 80210
  • Los Angeles
  • California
  • 90080-0210
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/06 00:00
End of Day Share Price2022/08/05 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


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.