HLF  Herbalife Ltd.

Exchange

NYSE

Sector

Health Care

Industry

Other Pharmaceuticals

Market Cap.

5.65B

Vuru Grade

66.22/100

Current Price

$60.74
-0.40 (-0.65%)

Growth Price

$69.08
Undervalued by 13.73%

Stability Price

$46.54
Overvalued by 23.38%

Company Metrics

  • P/E 21.32
  • P/S 1.25
  • P/B 46
  • EPS 2.85
  • Cash ROIC 75.82%
  • Cash Ratio 0.87
  • Dividend 0 / 0%
  • Avg. Vol. 1.16M
  • Shares 93.02M
  • Market Cap. 5.65B

Company Description

Herbalife Ltd., a network marketing company, sells weight management, nutritional supplement, energy, sports and fitness, and personal care products worldwide. It offers science based products in four principal categories: weight management; targeted nutrition; energy, sports, and fitness; and outer nutrition. The company's weight management product portfolio includes meal replacement shakes, weig... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Herbalife: Bet On Status Quo Instead Of Zero
Seeking Alpha - 18 hours ago
May 2017 options on Herbalife Ltd. (NYSE:HLF) are priced far above not just the recent volatility of share prices, but even above the substantially higher average volatility of the past two years.
Herbalife: All Of You Are Wrong
Seeking Alpha - 13 hours ago
There is a great deal of controversy surrounding Herbalife, and it is much ado about nothing. The security is efficiently priced, and there isn't much case for large movements in either direction.
Significant Movements: Herbalife LTD. (NYSE:HLF) - Is stories
Herbalife LTD. (HLF) Scheduled to Post Quarterly Earnings on Thursday - The Cerbat Gem
Trump Advisor Carl Icahn's Q4 Moves: Herbalife Ltd. (HLF), Herc Holdings Inc ...
Smarter Analyst - Feb 21, 2017
In Q4 billionaire hedge fund manager Carl Icahn upped his stake in controversial company Herbalife Ltd.(NYSE:HLF), which he is tussling over with fund manager Bill Ackman, and equipment rental company Herc, while reducing the fund's billion-dollar ...
Why Herbalife Ltd. Shares Plummeted 19% Last Month
Motley Fool - Dec 2, 2016
The volatility continued last month for nutritional-supplement maker Herbalife Ltd. (NYSE:HLF), with the stock falling 19% according to S&P Global Market Intelligence.
Herbalife Ltd. Announces Closing of $1.45 Billion Credit Facility
Yahoo Finance - Feb 15, 2017
Herbalife Ltd. (HLF), a global nutrition company, today announced that it has closed a new $1.45 billion senior secured credit facility, which consists of a $150 million revolving credit facility maturing 2022 and a $1.3 billion term loan maturing 2023 ...
Herbalife Ltd. (HLF) Moves Higher on Volume Spike for February 15 - Equities.com
Herbalife Shuns Naysayers; Latest Financing Deal Was 'Oversubscribed' - Benzinga
What's in Store for Herbalife (HLF) this Earnings Season?
Yahoo Finance - Feb 21, 2017
Herbalife Ltd. HLF is set to report fourth-quarter 2016 results on Feb 23. The question lingering in investors' minds is, whether the company will be able to maintain its positive earnings surprise streak in the to-be-reported quarter.
Herbalife Is Very Likely To Widely Beat EPS Estimates
Seeking Alpha - Feb 14, 2017
Herbalife uses volume points as a proxy for net sales, which makes it harder to estimate revenues. The guidance seems very conservative based on the items disclosed.
The Panagora Asset Management Inc. Has $7356000 Position in Herbalife LTD. (HLF) - DailyQuint
Elkfork Partners LLC Invests $3265000 in Herbalife LTD. (HLF) - BBNS
A Message To Herbalife Shorts: Stop Playing With Fire
Seeking Alpha - Feb 12, 2017
On February 9, I wrote an SA article explaining the reasons I was changing my stand on Herbalife (NYSE: HLF). You can find the article here.
Icahn Boosts Herbalife Bet While Advising Trump
Seeking Alpha - Feb 16, 2017
Happy birthday, Carl Icahn. A year into his 80s, Icahn (NYSE:IEP) has been advising the new US president (to the consternation of some senators) and recently added to his stakes in both Herbalife (NYSE:HLF) and Hertz (NYSE:HTZ). However, despite ...
Carl Icahn Expands Industrial Empire - Nasdaq
Why I'm Changing My Position On Herbalife
Seeking Alpha - Feb 6, 2017
Why I'm Changing My Position On Herbalife. Feb. 6.17 | About: Herbalife Ltd. ... The last 4 years have been quite tumultuous for Herbalife (NYSE: HLF).
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for HLF to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate HLF's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$60.74 Current Price

$69.08 Growth Price (DCF)

Undervalued by 13.73%


Growth Rate Assumed by Market: 11.91%


Future Free Cash Flow Growth Rate: 15.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$46.54 Stability Price (EPV)

Overvalued by 23.38%


Discount Rate: 15.0%

$3.40 Book Price

Overvalued by 94.40%


Varying Cash Return on Invested Capital over the past 5 years

HLF has efficiently invested its financial resources in buildings, projects, and equipment, resulting in strong returns. However, there is a substantial variation in their Cash ROIC from year-to-year. This company may have unreliable free cash flow or operates in a business where invested capital costs increase substantially on a sporadic basis. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

HLF has created $75.82 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20112012201320142015
Free Cash Flow 418.92M 446.26M 625.92M 337.70M 549.70M
divided by
Invested Capital 638.75M 653.52M 578.55M 854.70M 563.70M
Cash ROIC 65.59% 68.29% 108.19% 39.51% 97.52%

Varying Return on Equity over the past 5 years

HLF has generated strong profits with money shareholders have invested. However, there is a substantial variation in their Return on Equity from year-to-year. This may reflect management's inability to generate consistent returns or may be caused by one-time events. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

HLF has generated $56.54 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20112012201320142015
Net Income 412.58M 477.19M 527.53M 308.70M 339.10M
divided by
Stockholders' Equity 560.19M 420.76M 551.45M -334.40M -53.50M
Return on Equity 73.65% 113.41% 95.66% - -

Excellent Business Performance over the past 10 years

HLF has been able to maintain profitability in good times and bad. This could mean HLF has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

HLF has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Free Cash Flow 121.99M 228.87M 184.39M 225.29M 312.28M 418.92M 446.26M 625.92M 337.70M 549.70M

Very Weak Balance Sheet

HLF is in a poor financial position. This could be due to a slowdown in sales, indulging in debt-fuelled growth, or the nature of HLF's business. If it is highly capital intensive (see Economic Moat), they likely have to outlay significant capital just to stay competitive. This habit often destroys more value than it creates.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Cash 154.32M 187.41M 150.85M 150.80M 190.55M 258.78M 333.53M 972.97M 645.40M 889.80M
Current Assets 455.71M 487.10M 484.77M 513.50M 595.59M 768.82M 963.85M 1.64B 1.39B 1.57B
Total Assets 1.02B 1.07B 1.12B 1.15B 1.23B 1.45B 1.70B 2.47B 2.37B 2.48B
Current Liabilities 323.49M 375.62M 401.90M 429.97M 470.82M 548.69M 716.89M 922.18M 874.80M 1.02B
Total Liabilities 663.04M 885.00M 879.59M 786.74M 745.01M 886.02M 1.28B 1.92B 2.71B 2.53B
Stockholder' Equity 353.89M 182.24M 241.73M 359.31M 487.21M 560.19M 420.76M 551.45M -334.40M -53.50M
Current Ratio 1.41 1.30 1.21 1.19 1.27 1.40 1.34 1.78 1.59 1.53
TL-to-TA 0.65 0.83 0.78 0.69 0.60 0.61 0.75 0.78 1.14 1.02

Low or No Reinvestment of Profits over the past 10 years

HLF has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to HLF operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Retained Earnings 221.77M 25.19M 72.51M 159.71M 257.00M 305.93M 148.37M 247.28M -665.40M -326.30M
Retained Earnings Growth - -88.64% 187.84% 120.26% 60.92% 19.04% -51.50% 66.67% -369.09% 50.96%

Competitive Industry over the past 10 years

HLF is likely operating in an industry with medium to low barriers to entry. This may mean that HLF doesn't have a characteristic that's hard to replicate, such as exclusive distribution, branding or the ability to keep costs low. If Gross Margins are at least satisfactory, it's likely that HLF invests heavily in R&D and Sales, General & Administrative expenses.

Only $9.37 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Net Income 143.14M 191.45M 221.19M 203.35M 290.53M 412.58M 477.19M 527.53M 308.70M 339.10M
divided by
Revenue 1.89B 2.15B 2.36B 2.32B 2.73B 3.45B 4.07B 4.83B 4.96B 4.47B
Net Profit Margin 7.59% 8.92% 9.38% 8.75% 10.63% 11.94% 11.72% 10.93% 6.23% 7.59%

Strong Pricing Power over the past 10 years

HLF has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$79.97 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Gross Profit 1.51B 1.71B 1.90B 1.83B 2.18B 2.77B 3.26B 3.86B 3.98B 3.61B
divided by
Revenue 1.89B 2.15B 2.36B 2.32B 2.73B 3.45B 4.07B 4.83B 4.96B 4.47B
Gross Margin 79.83% 79.57% 80.57% 78.79% 79.56% 80.31% 80.05% 80.03% 80.18% 80.85%

Medium Capital Intensity over the past 10 years

HLF has used a reasonable amount of their financial resources to invest in facilities and equipment required to produce its goods and services. This isn't perfect, but it shouldn't be an area of concern unless this number is strongly trending upwards.

31.32% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Capital Expenditure 62.46M 41.94M 88.60M 59.77M 68.13M 90.41M 121.52M 146.96M 173.70M 79.00M
divided by
Net Income 143.14M 191.45M 221.19M 203.35M 290.53M 412.58M 477.19M 527.53M 308.70M 339.10M
Capital Expenditure Ratio 43.64% 21.91% 40.06% 29.39% 23.45% 21.91% 25.47% 27.86% 56.27% 23.30%

Inconsistent Dividend History over the past 10 years

HLF has started distributing dividends in the past couple years or has recently suspended their dividend distribution. The reliability of future distributions is unclear.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Dividend Paid - 41.54M 50.70M 48.72M 53.74M 85.49M 135.09M 123.06M 30.40M -
divided by
Shares Outstanding 74.51M 72.71M 65.77M 63.10M 62.26M 124.85M 117.86M 107.45M 90.80M 85.30M
Dividend Paid Per Share - 0.57 0.77 0.77 0.86 0.68 1.15 1.15 0.33 -
Price at Year End 18.10 18.36 9.69 19.77 33.95 51.67 29.39 77.92 38.04 53.86
Dividend Yield - 3.11% 7.96% 3.91% 2.54% 1.33% 3.90% 1.47% 0.88% -

Strong History of Stock Buybacks over the past 10 years

HLF has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Shares Outstanding 74.51M 72.71M 65.77M 63.10M 62.26M 124.85M 117.86M 107.45M 90.80M 85.30M
Stock Bought Back - 2.47% 10.56% 4.23% 1.35% -50.13% 5.93% 9.69% 18.33% 6.45%
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