Why Herbalife Is Poised to Underperform

Market-lagging returns could be written in this 1-Star.

Brian D. Pacampara, CFA
Brian D. Pacampara, CFA
Mar 15, 2013 at 8:30PM
Consumer Goods

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


Personal products

Trailing-12-Month Revenue

$4.1 billion


Chairman/CEO Michael Johnson

CFO John DeSimone

Return on Capital (average, past 3 years)



$333.5 million/$489.6 million

Dividend Yield




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."

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.