Why Herbalife Is Poised to Underperform

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, nutritional-supplement network marketing company Herbalife (NYSE: HLF  ) has received an alarming one-star ranking.

With that in mind, let's take a closer look at Herbalife and see what CAPS investors are saying about the stock right now.

Herbalife facts

   

Headquarters (founded)

Los Angeles, Calif. (1980)

Market Cap

$4.0 billion

Industry

Personal products

Trailing-12-Month Revenue

$4.1 billion

Management

Chairman/CEO Michael Johnson

CFO John DeSimone

Return on Capital (average, past 3 years)

45.2%

Cash/Debt

$333.5 million/$489.6 million

Dividend Yield

2.9%

Competitors

Amway

GNC Holdings (NYSE: GNC  )

Wal-Mart Stores (NYSE: WMT  )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 32% of the 654 members who have rated Herbalife believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, All-Star Brettmj, succinctly summed up the Herbalife bear case for our community: "Overpriced products, even if it isn't classified as a pyramid scheme this one will die off. [Underperform call] might go into the red for awhile but eventually people will come around to much better cheaper alternatives that don't have questionable sales tactics."

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Read/Post Comments (4) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 16, 2013, at 9:01 AM, randysandy wrote:

    I have to ask: why are you dooshbags allowed to even publish this drivel without any regulation? The thing is moron is that had all this controversy never happened, and had the stock not gone down the last few days, you wouldn't have written your negative and manipulative garbage. Before all the controversy in the headlines, didi you even know the ticker symbol?

  • Report this Comment On March 16, 2013, at 10:05 AM, randysandy wrote:

    Would you have written this article had nome of this controversy arisen? Would you even have known the ticker symbol? Such unregulated manipulation

  • Report this Comment On March 18, 2013, at 7:44 AM, taishiba wrote:

    lies lies lies lies. how much more BS will people believe?

  • Report this Comment On March 18, 2013, at 5:06 PM, rsinj wrote:

    I personally don't care about HLF nor the outcome one way or the other.

    However, the quality of this article is pretty poor no matter how you look at it.

    Looking at the title, what has been presented in it that comes to that conclusion? It's certainly not the information in the table. So that means it all comes down to the paragraphs on CAPS.

    "On CAPS, 32% of the 654 members who have rated Herbalife believe the stock will underperform the S&P 500 going forward."

    Well, that surely doesn't make your case, does it? Doesn't that say that 68% of the 654 members believe it will perform as well or better than the S&P 500 going forward?

    Do we really care about the bear case presented by the one "all-star" member? 68% of CAPS members disagree - isn't that the whole idea behind CAPS? What the majority are saying?

    This article was not objective at all. Not from the information presented in it.

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