Herbalife Tops Earnings For The 18th Time In A Row

July 29, 2013
        Herbalife topped earnings for the 18th time in a row after it released its quarterly earnings report on market close. With $1.22 billion in revenue, it topped the higher end Wall Street consensus by $40 million. This sent shares up nearly 6%, following 3.6% gain achieved during market hours. Following this report, Herbalife raised its guidance for the rest of the year. Though its third quarter projections lie slightly below analyst expectations, the company expects growth of 16.5-18.5%. This raises its revenue expectations for 2013 much higher than analyst expectations.

         Herbalife(HLF), a company specializing in nutritional goods, has been on a winning streak lately. After a long downward streak, the company's stock has made a fantastic return. From December of 2012, the stock has risen over 100% on countless earnings beats and the influence of large hedge fund investors.
        Over the past few quarters, Herbalife has been extremely volatile due to the back-and-forths of billionaire investors Carl Ichan and Bill Ackman. Ichan argued that HLF was a long term hold while Ackman suggested shorting the stock. Their influence sent HLF spiking up and down 10% again and again. In December, Ackman recommended short selling $1 billion worth of shares, which sent the stock plummeting 30%! Ichan then announced 16.5% stake in the company which helped it double its value since bottoming out.
        The company has relatively high amounts of both cash and debt. When combined, its debt outweighs by about $250 million. If HLF continues to top earnings, this value shouldn't cause any worry. The company's current P/E Ratio is lower than most of the industry, and its projected value shows room for growth. Though its revenue is shadowed by some of the larger companies, it has posted better growth than many other companies. Herbalife may be able to provide returns to billionaires like Ichan and Ackman, but its extreme volatility makes it a dangerous investment for those who cannot hold long term.

Sources:
CNBC

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