Can Herbalife Earnings Keep the Stock Soaring?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Herbalife (NYSE: HLF  ) will release its quarterly report on Monday and, as the subject of attention from some of the most influential investors in the market, the company can expect fireworks to ensue. In the midst of such a public battle between bullish and bearish investors, it's easy to lose sight of company fundamentals, but Herbalife earnings might help make the case clearer for one side over the other.

Herbalife has faced serious accusations lately, with hedge-fund manager Bill Ackman referring to the company's business model as a pyramid scheme. Yet, equally prominent investor Carl Icahn has taken the opposite side of Ackman's short trade, buying up a big stake in the company, and making moves to put two representatives on the Herbalife board. Meanwhile, though, the company is still in business to make money, and must keep operating despite the controversies. Let's take an early look at what's been happening with Herbalife over the past quarter, and what we're likely to see in its quarterly report.

Stats on Herbalife

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$1.16 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

How fast can Herbalife earnings grow?
Analysts have had mixed views about Herbalife earnings recently, pulling back on their estimates for the June quarter by $0.08 per share, but boosting their projections for the full 2013 and 2014 years. The stock, though, has been unequivocal in its upward movement, climbing 60% just since late April.

Herbalife started out the quarter well for Icahn and other bullish investors, reporting first-quarter financial results that featured a 17% jump in revenue, and earnings per share that jumped 20%. The company also gave favorable guidance, with expectations of 13% to 15% sales growth producing $4.60 to $4.80 in earnings per share for the full 2013 year.

Fundamentally, the company is in the middle of an industry that's gaining in importance, as people pay more attention to the obesity epidemic. Weight-specialists Weight Watchers and NutriSystem come at the industry from a slightly different angle, with more specialization on weight specifically, without the diverse personal-care and other products that Herbalife offers, and they've faced some challenges in producing growth. GNC Holdings (NYSE: GNC  ) , which is arguably a more direct competitor that resembles Herbalife more closely, reported earnings earlier today that rose by 18% from the previous year, sending its stock up nearly 11% in today's trading.

Herbalife recently made a deal with sports and entertainment company AEG Worldwide expanding its existing relationship under which Herbalife sponsors the shirts of the LA Galaxy major-league soccer team. The new deal adds Sweden's Hammarby team to the mix, with the hopes of boosting Herbalife's international exposure.

Still, all attention will remain on the Icahn/Ackman battle for the foreseeable future, especially as it now appears to be as much a personal fight as a difference of investment opinion. One big question is how much in losses Ackman can afford to absorb before a short squeeze of massive proportion results. But for now, neither investor is giving the other any quarter.

In the Herbalife earnings report, watch to see how the company responds to the ongoing drama. Ideally, the company should be able to rely on its fundamental results and let its numbers do the talking for it.

Many health-conscious shoppers are still in the dark about how Obamacare might affect you and your portfolio. The Motley Fool's special report, "Everything You Need to Know About Obamacare," takes a 360-degree look at how the law may impact your taxes, health insurance, and investments. Click here to grab your free copy today.

Click here to add Herbalife to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Read/Post Comments (0) | 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.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2560011, ~/Articles/ArticleHandler.aspx, 9/27/2016 10:04:21 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 48 minutes ago Sponsored by:
DOW 18,228.30 133.47 0.74%
S&P 500 2,159.93 13.83 0.64%
NASD 5,305.71 48.22 0.92%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 4:02 PM
HLF $61.17 Up +0.04 +0.07%
Herbalife CAPS Rating: *
GNC $20.26 Up +0.37 +1.86%
GNC Holdings CAPS Rating: ***