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GuruFocus Financial Strength Rank measures how strong a company’s financial situation is. It is based on these factors

1. The debt burden that the company has as measured by its Interest coverage (current year).
2. Debt to revenue ratio. The lower, the better
3. Altman Z-score.

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

Financial Strength : 6/10

vs
industry
vs
history
Cash to Debt 0.55
HLF's Cash to Debt is ranked lower than
53% of the 1564 Companies
in the Global Household & Personal Products industry.

( Industry Median: 0.64 vs. HLF: 0.55 )
Ranked among companies with meaningful Cash to Debt only.
HLF' s Cash to Debt Range Over the Past 10 Years
Min: 0.28  Med: 0.66 Max: N/A
Current: 0.55
Equity to Asset 0.03
HLF's Equity to Asset is ranked lower than
95% of the 1516 Companies
in the Global Household & Personal Products industry.

( Industry Median: 0.52 vs. HLF: 0.03 )
Ranked among companies with meaningful Equity to Asset only.
HLF' s Equity to Asset Range Over the Past 10 Years
Min: -0.18  Med: 0.23 Max: 0.43
Current: 0.03
-0.18
0.43
Interest Coverage 5.98
HLF's Interest Coverage is ranked lower than
63% of the 1294 Companies
in the Global Household & Personal Products industry.

( Industry Median: 11.80 vs. HLF: 5.98 )
Ranked among companies with meaningful Interest Coverage only.
HLF' s Interest Coverage Range Over the Past 10 Years
Min: 5.6  Med: 28.66 Max: 58.01
Current: 5.98
5.6
58.01
F-Score: 7
Z-Score: 4.32
M-Score: -2.92
WACC vs ROIC
10.12%
58.73%
WACC
ROIC
GuruFocus Profitability Rank ranks how profitable a company is and how likely the company’s business will stay that way. It is based on these factors:

1. Operating Margin
2. Trend of the Operating Margin (5-year average). The company with an uptrend profit margin has a higher rank.
••3. Consistency of the profitability
4. Piotroski F-Score
5. Predictability Rank•

The maximum rank is 10. A rank of 7 or higher means a higher profitability and may stay that way. A rank of 3 or lower indicates that the company has had trouble to make a profit.

Profitability Rank is not directly related to the Financial Strength Rank. But if a company is consistently profitable, its financial strength will be stronger.

Profitability & Growth : 9/10

vs
industry
vs
history
Operating margin (%) 13.75
HLF's Operating margin (%) is ranked higher than
80% of the 1550 Companies
in the Global Household & Personal Products industry.

( Industry Median: 4.98 vs. HLF: 13.75 )
Ranked among companies with meaningful Operating margin (%) only.
HLF' s Operating margin (%) Range Over the Past 10 Years
Min: 10.36  Med: 14.13 Max: 16.28
Current: 13.75
10.36
16.28
Net-margin (%) 7.96
HLF's Net-margin (%) is ranked higher than
74% of the 1553 Companies
in the Global Household & Personal Products industry.

( Industry Median: 3.16 vs. HLF: 7.96 )
Ranked among companies with meaningful Net-margin (%) only.
HLF' s Net-margin (%) Range Over the Past 10 Years
Min: 6.23  Med: 9.15 Max: 11.94
Current: 7.96
6.23
11.94
ROA (%) 14.75
HLF's ROA (%) is ranked higher than
92% of the 1584 Companies
in the Global Household & Personal Products industry.

( Industry Median: 3.24 vs. HLF: 14.75 )
Ranked among companies with meaningful ROA (%) only.
HLF' s ROA (%) Range Over the Past 10 Years
Min: 12.79  Med: 19.29 Max: 30.61
Current: 14.75
12.79
30.61
ROC (Joel Greenblatt) (%) 180.80
HLF's ROC (Joel Greenblatt) (%) is ranked higher than
97% of the 1570 Companies
in the Global Household & Personal Products industry.

( Industry Median: 11.86 vs. HLF: 180.80 )
Ranked among companies with meaningful ROC (Joel Greenblatt) (%) only.
HLF' s ROC (Joel Greenblatt) (%) Range Over the Past 10 Years
Min: 113.68  Med: 198.49 Max: 306.98
Current: 180.8
113.68
306.98
Revenue Growth (3Y)(%) 14.90
HLF's Revenue Growth (3Y)(%) is ranked higher than
86% of the 1361 Companies
in the Global Household & Personal Products industry.

( Industry Median: 2.50 vs. HLF: 14.90 )
Ranked among companies with meaningful Revenue Growth (3Y)(%) only.
HLF' s Revenue Growth (3Y)(%) Range Over the Past 10 Years
Min: 5.3  Med: 15.20 Max: 26.9
Current: 14.9
5.3
26.9
EBITDA Growth (3Y)(%) 8.40
HLF's EBITDA Growth (3Y)(%) is ranked higher than
60% of the 1174 Companies
in the Global Household & Personal Products industry.

( Industry Median: 3.40 vs. HLF: 8.40 )
Ranked among companies with meaningful EBITDA Growth (3Y)(%) only.
HLF' s EBITDA Growth (3Y)(%) Range Over the Past 10 Years
Min: 6.7  Med: 14.60 Max: 30.4
Current: 8.4
6.7
30.4
EPS Growth (3Y)(%) -0.70
HLF's EPS Growth (3Y)(%) is ranked lower than
59% of the 1050 Companies
in the Global Household & Personal Products industry.

( Industry Median: 4.60 vs. HLF: -0.70 )
Ranked among companies with meaningful EPS Growth (3Y)(%) only.
HLF' s EPS Growth (3Y)(%) Range Over the Past 10 Years
Min: -0.7  Med: 25.20 Max: 40.7
Current: -0.7
-0.7
40.7
» HLF's 10-Y Financials

Financials (Next Earnings Date: 2016-08-03)


Revenue & Net Income
Cash & Debt
Oprt. Cash Flow & Free Cash Flow
Oprt. Cash Flow & Net Income

» Details

Guru Trades

Q2 2015

HLF Guru Trades in Q2 2015

Carl Icahn 17,000,000 sh (unchged)
HOTCHKIS & WILEY Sold Out
Jeremy Grantham 79,200 sh (-0.75%)
George Soros 1,968,833 sh (-42.90%)
» More
Q3 2015

HLF Guru Trades in Q3 2015

Jim Simons 210,600 sh (New)
Paul Tudor Jones 19,008 sh (New)
Carl Icahn 17,000,000 sh (unchged)
Jeremy Grantham Sold Out
George Soros Sold Out
» More
Q4 2015

HLF Guru Trades in Q4 2015

David Dreman 168 sh (New)
Jim Simons 919,200 sh (+336.47%)
Carl Icahn 17,000,000 sh (unchged)
Paul Tudor Jones Sold Out
» More
Q1 2016

HLF Guru Trades in Q1 2016

Lee Ainslie 4,630 sh (New)
Paul Singer 45,802 sh (New)
Jim Simons 2,792,700 sh (+203.82%)
Carl Icahn 17,000,000 sh (unchged)
David Dreman 168 sh (unchged)
» More
» Details

Insider Trades

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Business Description

Industry: Consumer Packaged Goods » Household & Personal Products
Compare:OTCPK:TRHF, OTCPK:PORBF, NYSE:SPB, OTCPK:KCDMF, NYSE:EPC, NYSE:COTY, OTCPK:LCCTF, NYSE:NUS, OTCPK:PGENY, NAS:HELE, OTCPK:HEGIF, OTCPK:SSDOF, NYSE:REV, NYSE:AVP, NYSE:USNA, OTCPK:ORFLY, NAS:IPAR, OTCPK:KRXBF, NAS:RDEN, NAS:NHTC » details
Traded in other countries:HOO.Germany,
Herbalife Ltd is a nutrition company. The Company along with its subsidiaries sells weight management, targeted nutrition, energy, sports & fitness, and outer nutrition products.

Herbalife Ltd was incorporated on April 4, 2002 in Cayman Islands. The Company along with its subsidiaries develops and sells weight management, healthy meals & snacks, sports & fitness, energy & targeted nutritional products as well as personal care products. It offers its products into five groups: weight management, targeted nutrition, energy, sports & fitness, outer nutrition & literature, promotional and other. The Weight Management products are meal replacement, protein shakes, drink mixes, weight loss enhancers and healthy snacks. Its representative products include Formula 1 Healthy Meal, Herbal Tea Concentrate, Protein Drink Mix, Personalized Protein Powder, Total Control, Prolessa Duo and Protein Bars. The Targeted Nutrition products are dietary and nutritional supplements containing quality herbs, vitamins, minerals and other natural ingredients. Its representative products include Aloe Concentrate, Niteworks, Garden 7 phytonutrient supplement, Best Defense for improved immune system, and COQ10 Plus. The Energy, Sports & Fitness includes products that support a healthy active lifestyle. Its representative products include Herbalife24 product line, Liftoff energy drink and H3O hydration drink. The Outer Nutrition includes facial skin care, body care and hair care products including Herbalife SKIN line, Skin Activator anti-aging line, Herbal Aloe Bath & Body Careline, NouriFusion multivitamin skin care line and Radiant C antioxidant skin care line. The Literature, Promotional and Other includes Start-up kits, sales tools and educational materials including International Business Packs & BizWorks. It sells its products through retail stores, sales representatives, sales officers & independent service providers in China. It operates in geographical regions including North America; Mexico; South & Central America; EMEA, including Europe, the Middle East & Africa; Asia Pacific and China. Its competitors include NuSkin Enterprises, Nature's Sunshine, Alticor/Amway, Melaleuca, Avon Products, Oriflame, Omnilife, Tupperware and Mary Kay, as well as retail establishments including Weight Watchers, Jenny Craig, General Nutrition Centers, Wal-Mart and retail pharmacies. It use the umbrella trademarks Herbalife and the Tri-Leaf design and protect other trademarks and trade names related to its products and operations, such as Niteworks and Liftoff. In both its United States and foreign markets, it is affected by laws, governmental regulations, administrative determinations, court decisions and similar constraints.

Guru Investment Theses on Herbalife Ltd

Bill Ackman Comments on Herbalife - May 11, 2016

On May 5th, Herbalife (NYSE:HLF) reported improved financial performance for the first quarter of the year and updated their regulatory disclosures as follows:

“The Company is currently in discussions with the FTC regarding a potential resolution of these matters. The possible range of outcomes include the filing by the FTC of a contested civil complaint and further discussions leading to a settlement which would likely include a monetary payment and injunctive and other relief. The Company is cooperating with the investigation and at this time it is difficult to predict the timing, and the likely outcome, of these matters. The discussions with the FTC are in the advanced stages, but there are still a number of material open issues that could preclude reaching final agreement. If discussions with the FTC do not continue to progress, it is likely that litigation would ensue. Although we are confident in our legal position, litigation outcomes by their very nature are difficult to predict and there can be no assurance of a particular outcome.

“The outcome of these matters with the FTC, whether by mutual resolution or through litigation, could have a material adverse impact on the Company’s business operations, its results of operations or its financial condition. The Company believes it is reasonably possible that it may have incurred a loss.

At the present time, the Company’s best estimate of the payment amount that would be made by the Company under a mutual resolution with the FTC is $200 million. The Company has not accrued any amounts with respect to any potential monetary payments relating to this matter. If a resolution is not attained and litigation ensues, the Company is unable to estimate a range of potential loss, if any, relating to these matters.”

The company’s language provides greater specificity and introduces a narrower range of outcomes versus the company’s 10-K, filed on February 25th, which stated:

“The possible range of outcomes include the filing by the FTC of a contested civil complaint, further discussions leading to a settlement which could include a monetary payment and other relief or the closure of these matters without action.”

It is notable that the company removed the “closure of these matters without action” language from the recent 10-Q.

Investors reacted favorably to the company’s disclosure apparently focusing on the modest size of Herbalife’s estimate of the monetary portion of the settlement, less than two quarters of earnings, suggestive of an overall settlement that would be no more than a “slap on the wrist.” While a $200 million settlement would be one of the highest ever in an FTC consumer protection action, it would be immaterial to Herbalife. Investors, however, appear to ignore the fact that the company may not be able to settle with the FTC, and instead, will be sued by the FTC for being a pyramid scheme, or, alternatively, that a settlement’s “injunctive and other relief” may materially impair HLF’s future profitability and growth potential.

Recently, the FTC obtained significant injunctive and other relief in its Vemma pyramid scheme litigation, which, we believe, if applied to Herbalife would significantly harm the company’s ability to operate profitability. We expect the FTC to demand similar safeguards and restrictions for Herbalife as it has required in the Vemma case.

On the evening of May 6th, shortly after HLF’s press statement about a possible resolution with the FTC and the stock price’s substantial increase, Justin Cole, the FTC’s Director of the Office of Public Affairs, provided an on-the-record statement to the media:

“Injunctive relief can be just as significant as the money obtained for consumers and even more influential on a company’s future operations.”

We believe it is very unusual for the FTC to respond to a public company’s characterization of settlement negotiations. The FTC’s reaction may signal its concern that Herbalife or investors are minimizing the significance of potential injunctive relief. The key question is what “injunctive and other relief” may be. We expect that the relief imposed by the FTC will require modifications to HLF’s business practices which will be materially adverse to HLF.

The company reported net sales of $1.12 billion for the quarter, up ~1% year-over-year (after the impact of FX), off a relatively easy comp, beating management’s and analysts’ guidance by 6% and 4%, respectively. A combination of better-than-expected volume growth and a less severe FX environment contributed to this result. China (+39%) and EMEA (+17%) continue to be the strongest regions. Notably, North America (+9%) posted its best quarter since Q1’2014. Driven by higher-than-expected volume and net sales, Net Income grew ~7% year-over-year (“YoY”) and adjusted EPS was up ~5%.

From a cash flow perspective, results were less favorable, as operating cash flow and free cash flow declined ~12% and ~20% YoY, respectively. Total cash on HLF’s balance sheet decreased 13% to $774 million after the company paid down $230 million of debt in the quarter as requiredend, at which point HHC will begin to generate a significant amount of cash flow from condo closings. Anaha, a 317-unit project, is expected to be completed by the summer of 2017. In February 2016, HHC began construction of Ae’o, the third of four mixed-use residential towers planned for the first phase of the Ward Village development. Whole Foods has pre-leased a substantial portion of the retail space at the base of this tower, which is scheduled for completion in 2018. The fourth condo tower, the 424-unit Ke Kilohana, sold 90% of its units in five days (in April 2016). Ke Kilohana is a workforce residential tower with 375 of its units designated for local residents.

From Bill Ackman (Trades, Portfolio)'s first quarter shareholder letter.

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Bill Ackman Comments on Herbalife - May 11, 2016

On May 5th, Herbalife (NYSE:HLF) reported improved financial performance for the first quarter of the year and updated their regulatory disclosures as follows:

“The Company is currently in discussions with the FTC regarding a potential resolution of these matters. The possible range of outcomes include the filing by the FTC of a contested civil complaint and further discussions leading to a settlement which would likely include a monetary payment and injunctive and other relief. The Company is cooperating with the investigation and at this time it is difficult to predict the timing, and the likely outcome, of these matters. The discussions with the FTC are in the advanced stages, but there are still a number of material open issues that could preclude reaching final agreement. If discussions with the FTC do not continue to progress, it is likely that litigation would ensue. Although we are confident in our legal position, litigation outcomes by their very nature are difficult to predict and there can be no assurance of a particular outcome.

“The outcome of these matters with the FTC, whether by mutual resolution or through litigation, could have a material adverse impact on the Company’s business operations, its results of operations or its financial condition. The Company believes it is reasonably possible that it may have incurred a loss.

At the present time, the Company’s best estimate of the payment amount that would be made by the Company under a mutual resolution with the FTC is $200 million. The Company has not accrued any amounts with respect to any potential monetary payments relating to this matter. If a resolution is not attained and litigation ensues, the Company is unable to estimate a range of potential loss, if any, relating to these matters.”

The company’s language provides greater specificity and introduces a narrower range of outcomes versus the company’s 10-K, filed on February 25th, which stated:

“The possible range of outcomes include the filing by the FTC of a contested civil complaint, further discussions leading to a settlement which could include a monetary payment and other relief or the closure of these matters without action.”

It is notable that the company removed the “closure of these matters without action” language from the recent 10-Q.

Investors reacted favorably to the company’s disclosure apparently focusing on the modest size of Herbalife’s estimate of the monetary portion of the settlement, less than two quarters of earnings, suggestive of an overall settlement that would be no more than a “slap on the wrist.” While a $200 million settlement would be one of the highest ever in an FTC consumer protection action, it would be immaterial to Herbalife. Investors, however, appear to ignore the fact that the company may not be able to settle with the FTC, and instead, will be sued by the FTC for being a pyramid scheme, or, alternatively, that a settlement’s “injunctive and other relief” may materially impair HLF’s future profitability and growth potential.

Recently, the FTC obtained significant injunctive and other relief in its Vemma pyramid scheme litigation, which, we believe, if applied to Herbalife would significantly harm the company’s ability to operate profitability. We expect the FTC to demand similar safeguards and restrictions for Herbalife as it has required in the Vemma case.

On the evening of May 6th, shortly after HLF’s press statement about a possible resolution with the FTC and the stock price’s substantial increase, Justin Cole, the FTC’s Director of the Office of Public Affairs, provided an on-the-record statement to the media:

“Injunctive relief can be just as significant as the money obtained for consumers and even more influential on a company’s future operations.”

We believe it is very unusual for the FTC to respond to a public company’s characterization of settlement negotiations. The FTC’s reaction may signal its concern that Herbalife or investors are minimizing the significance of potential injunctive relief. The key question is what “injunctive and other relief” may be. We expect that the relief imposed by the FTC will require modifications to HLF’s business practices which will be materially adverse to HLF.

The company reported net sales of $1.12 billion for the quarter, up ~1% year-over-year (after the impact of FX), off a relatively easy comp, beating management’s and analysts’ guidance by 6% and 4%, respectively. A combination of better-than-expected volume growth and a less severe FX environment contributed to this result. China (+39%) and EMEA (+17%) continue to be the strongest regions. Notably, North America (+9%) posted its best quarter since Q1’2014. Driven by higher-than-expected volume and net sales, Net Income grew ~7% year-over-year (“YoY”) and adjusted EPS was up ~5%.

From a cash flow perspective, results were less favorable, as operating cash flow and free cash flow declined ~12% and ~20% YoY, respectively. Total cash on HLF’s balance sheet decreased 13% to $774 million after the company paid down $230 million of debt in the quarter as requiredend, at which point HHC will begin to generate a significant amount of cash flow from condo closings. Anaha, a 317-unit project, is expected to be completed by the summer of 2017. In February 2016, HHC began construction of Ae’o, the third of four mixed-use residential towers planned for the first phase of the Ward Village development. Whole Foods has pre-leased a substantial portion of the retail space at the base of this tower, which is scheduled for completion in 2018. The fourth condo tower, the 424-unit Ke Kilohana, sold 90% of its units in five days (in April 2016). Ke Kilohana is a workforce residential tower with 375 of its units designated for local residents.

From Bill Ackman (Trades, Portfolio)'s first quarter shareholder letter.

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Bill Ackman Comments on Herbalife Short - Dec 16, 2015

Herbalife (NYSE:HLF) Short

Our thesis on HLF remains unchanged. We believe that Herbalife will ultimately be subject to regulatory action or will collapse because of fundamental deterioration in its business which relies on the continual recruitment of new victims. During the quarter, the potential for regulatory action increased while business fundamentals deteriorated.

From a regulatory perspective, we view the Complaint that the FTC filed on August 17th against Vemma Nutrition Company (“Vemma”), another MLM whose structure is similar to HLF’s, as a very positive development. The preliminary injunction issued against Vemma on September 18th is likely to make Vemma’s business totally unviable and provides a template for claims the FTC could bring against Herbalife.

On October 27th, New York State Senator Jeff Klein, working with Public Advocate Letitia James and a non-profit community group called Make The Road New York, released a critical report on Herbalife titled: "The American Scheme: Herbalife's Pyramid Shakedown". Based on its hidden camera investigations of more than 60 nutrition clubs located in New York City, the report concluded that Herbalife distributors are “running an illegal pyramid scheme.” The report was supported by data from 56 victims who individually lost as much as $100,000. On December 9th, Sen. Klein held a public roundtable to advance his campaign to stop Herbalife’s deceptive tactics. Senator Klein has proposed New York State legislation that would amend the New York State General Business Law to better protect New York State residents.

Despite predictions from Herbalife supporters that regulatory investigations would end during the quarter, they appear to have intensified. The company has now spent a total of $101 million defending itself, including $11.2 million in the quarter. Expenses related to “responding to governmental inquiries” increased from $5.8 million last quarter to $7.6 million this quarter which reflects the growing intensity of ongoing investigations. Assuming Herbalife is spending about $500 per hour on lawyers, $ 7.6 million represents 15,200 hours of legal time during the quarter, or 168 hours of legal time per day, seven days per week.

Herbalife’s fundamentals continued to decline during the quarter. Notably “total members” – perhaps Herbalife’s most important operating metric – declined from 4.1 million in the second quarter to 4.0 million in third quarter indicating that Herbalife churned through at least 500,000 members as the rate of member churn exceeded Herbalife’s ability to find new victims.3 On its conference call, the company also began using a new operating metric called ‘active members,’ suggesting that Herbalife concedes that a proportion – we expect, a large proportion – of its members are inactive. In our experience, companies that change the standards by which they measure themselves do so only when the old metric shows business deterioration that they would rather not disclose.

With respect to third quarter earnings, Herbalife posted weak revenues, but was able to reduce or defer certain expenses in order to generate earnings that exceeded analyst estimates. Among other questionable add-backs, Herbalife excludes regulatory and costs to “defend its business model” from its earnings estimates despite the fact that these expenses are likely to continue. On a consolidated basis, the company reported net sales of $1.1 billion, down 12% year-over-year, which was worse than Street expectations and below management guidance. The negative variance was largely attributable to foreign exchange headwinds. Similar to last quarter, China continues to be the key driver of Herbalife’s growth. While China’s year-over-year growth was 25%, Herbalife China revenues declined 5% when compared to the previous quarter.

Notably, HLF’s South Korean market continued to show substantial deterioration in the quarter. South Korea has been one of Herbalife’s largest markets and a significant driver of the company’s revenue and earnings growth. Over the last several years, South Korea has been Herbalife’s third or fourth largest market and one of its most profitable with approximately 56% contribution margins versus 43% for the rest of the company. Beginning a year ago, Herbalife Korea began to decline. This deterioration accelerated notably this quarter, down 39% versus last year on a constant-currency basis, and down 46% on an actual basis.

While management continues to blame the decline in Korea on “changes in the business model,” to us this looks like the classic “pop-and-drop” that is pervasive in pyramid schemes, a phrase that CEO Michael Johnson previously used to describe Herbalife’s rapid growth and inevitable decline in certain geographical regions. If one is looking for obvious evidence that Herbalife is a pyramid scheme, one need only look at the massive growth and rapid decline of Herbalife’s South Korea business and compare it with Unilever or another legitimate consumer packaged goods company.

From Bill Ackman (Trades, Portfolio)'s Pershing Square Holdings third quarter 2015 letter to shareholders.

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Bill Ackman Comments on Herbalife Short - Sep 11, 2015

Herbalife (NYSE:HLF) Short



Despite the substantial increase in HLF’s share price year to date, we remain confident that HLF is an unlawful pyramid scheme that will eventually be shut down by regulators or collapse on its own.



The increase in the stock price appears to have been driven by HLF beating its recently reduced earnings guidance, and statements by some HLF analysts suggesting that the company has resolved its SEC issues and is close to settling with the FTC (supposedly later this summer). We believe the SEC, the FTC, Department of Justice, FBI, and State AGs continue to have active investigations of the company that are unlikely to be resolved favorably in the short term. In recent months, the Department of Justice has sought information from the company, distributors and third parties through the issuance of subpoenas.



The company’s recent 10Q filing appears to confirm the ongoing regulatory actions, disclosing that expenses for “defending its business model” and “responding to regulatory inquiries” increased by approximately two-thirds to a total of $13 million. HLF has now spent approximately $90 million defending itself, costs which it adds back to its “Adjusted Earnings” as “non-recurring,” but which we expect will continue until the company is shut down or collapses on its own.



In its 10Q filed on August 5, 2015, HLF disclosed that net sales year-over-year declined in every separately reported region except China. North America sales fell 8.2%, South and Central America fell 34.3%, and Europe Middle East and Africa fell 14.7%. Excluding the impact of China, consolidated net sales would have declined 19%. Most of HLF’s markets also experienced declines on a currency-adjusted basis. For example, local currency sales declined 30% in South Korea, 33% in Malaysia, and 21% in the United Kingdom.



The rapid declines in nearly all of Herbalife’s markets are consistent with a pyramid scheme’s ‘pop-and-drop’ as markets become saturated. China continues to be the core driver of growth. Sales in China increased 38% and have now surpassed the U.S. as HLF’s largest market. We believe that HLF’s China business violates local anti-MLM laws, which are the strictest in the world. For more information on HLF’s Chinese violations of law, we encourage you to review our March 2014 presentation on “Herbalife in China” available at www.FactsAboutHerbalife.com.



Herbalife is now guiding to adjusted earnings per share of $4.50-$4.70 for 2015, approximately 30% lower than analyst expectations a year ago. At its recent share price of ~$60, Herbalife trades at 13 times earnings multiple, above its approximate 12 times historical average. A $60 stock price effectively assigns no weight to the potential for regulatory intervention or market saturation and collapse. Furthermore, a substantial majority of Herbalife’s sales are exposed to emerging markets around the world that are experiencing dramatic currency declines and economic deterioration due to falling oil and commodity prices. When this is considered along with Herbalife’s dependence on China for growth, we find the current stock price substantially overvalued on a fundamental basis even if one were to assume the company is operating legally in all respects.



From Pershing Square's semi-annual 2015 report.



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Top Ranked Articles about Herbalife Ltd

The Battle of the Billionaire Gurus – and the Future of Herbalife Did Herbalife operate a pyramid scheme that cheated its independent distributors, or not? Two gurus put their money, a lot of money, on opposite sides of the claim. Here’s who won. . . .
Two of the great investing names of our times, Carl Icahn (Trades, Portfolio) of Icahn Capital Management LP and Bill Ackman (Trades, Portfolio) of Pershing Square Capital Management, L.P. are both friends and bitter rivals. That rivalry arises out of their diametrically opposed views about Herbalife, the nutritional supplements company. And more specifically, about the compensation of independent distributors who sell those products to consumers. Read more...
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During his conference call this morning, Bill Ackman (Trades, Portfolio) presented on Herbalife’s settlement with the Federal Trade Commission. After summarizing background information of the case, Ackman discussed the implications of the settlement based on three complaint categories. Read more...
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Herbalife: FTC Settlement Spells Trouble Herbalife agreement will restrict its marketing opportunities
The market judged the Herbalife (NYSE:HLF) FTC settlement as an extremely favorable one and the stock surged. Over the weekend many market participants will find the time to actually dig into the 31-page agreement. They won’t like what they will find. Read more...
Herbalife Increases Carl Icahn's Ownership Limit Icahn took opposite bet from Ackman
As part of Herbalife's announcement regarding its settlement with the FTC, it said its board had allowed Carl Icahn (Trades, Portfolio) to own 34.99% of the company, an increase from his previous 25% limit. In response, Icahn made the following statement: Read more...
Bill Ackman's Herbalife Settles With FTC, Stock Is Undervalued Company hurting short-seller appears attractive
Bill Ackman (Trades, Portfolio)’s Pershing Square sustained another strike Friday when a long-time short, nutrition direct seller Herbalife (NYSE:HLF), settled with the FTC for $200 million if it made certain changes to its business model, finally laying to rest his allegation that it is a pyramid scheme. Read more...
Lower or Eliminate Risk in a Volatile Value Stock: Herbalife Case Study Discover two strategies for protecting your value stock from further dips and drops
On Dec. 19, 2012, activist investor Bill Ackman (Trades, Portfolio) of Pershing Square Capital let it be known he was shorting Herbalife Ltd. (NYSE:HLF) by a massive $1 billion. A day later he shared his reasoning at an investment conference. The fallout came quickly and hammered Herbalife shareholders, as this chart shows: Read more...
Bill Ackman Comments on Herbalife Guru stock highlight
On May 5th, Herbalife (NYSE:HLF) reported improved financial performance for the first quarter of the year and updated their regulatory disclosures as follows: Read more...
Bill Ackman Comments on Herbalife Guru stock highlight
On May 5th, Herbalife (NYSE:HLF) reported improved financial performance for the first quarter of the year and updated their regulatory disclosures as follows: Read more...

Ratios

vs
industry
vs
history
P/E(ttm) 16.26
HLF's P/E(ttm) is ranked higher than
62% of the 1371 Companies
in the Global Household & Personal Products industry.

( Industry Median: 20.49 vs. HLF: 16.26 )
Ranked among companies with meaningful P/E(ttm) only.
HLF' s P/E(ttm) Range Over the Past 10 Years
Min: 4.06  Med: 14.20 Max: 78.46
Current: 16.26
4.06
78.46
Forward P/E 14.33
HLF's Forward P/E is ranked higher than
76% of the 190 Companies
in the Global Household & Personal Products industry.

( Industry Median: 20.58 vs. HLF: 14.33 )
Ranked among companies with meaningful Forward P/E only.
N/A
PE(NRI) 16.26
HLF's PE(NRI) is ranked higher than
62% of the 1252 Companies
in the Global Household & Personal Products industry.

( Industry Median: 20.57 vs. HLF: 16.26 )
Ranked among companies with meaningful PE(NRI) only.
HLF' s PE(NRI) Range Over the Past 10 Years
Min: 4.01  Med: 14.18 Max: 76.5
Current: 16.26
4.01
76.5
Price/Owner Earnings (ttm) 16.57
HLF's Price/Owner Earnings (ttm) is ranked higher than
63% of the 630 Companies
in the Global Household & Personal Products industry.

( Industry Median: 23.11 vs. HLF: 16.57 )
Ranked among companies with meaningful Price/Owner Earnings (ttm) only.
HLF' s Price/Owner Earnings (ttm) Range Over the Past 10 Years
Min: 3.86  Med: 12.89 Max: 56.07
Current: 16.57
3.86
56.07
P/B 96.90
HLF's P/B is ranked lower than
99% of the 1630 Companies
in the Global Household & Personal Products industry.

( Industry Median: 1.67 vs. HLF: 96.90 )
Ranked among companies with meaningful P/B only.
HLF' s P/B Range Over the Past 10 Years
Min: 2.99  Med: 10.65 Max: 155.84
Current: 96.9
2.99
155.84
P/S 1.30
HLF's P/S is ranked lower than
56% of the 1652 Companies
in the Global Household & Personal Products industry.

( Industry Median: 1.02 vs. HLF: 1.30 )
Ranked among companies with meaningful P/S only.
HLF' s P/S Range Over the Past 10 Years
Min: 0.37  Med: 1.34 Max: 2.48
Current: 1.3
0.37
2.48
PFCF 11.05
HLF's PFCF is ranked higher than
74% of the 674 Companies
in the Global Household & Personal Products industry.

( Industry Median: 21.21 vs. HLF: 11.05 )
Ranked among companies with meaningful PFCF only.
HLF' s PFCF Range Over the Past 10 Years
Min: 3.83  Med: 12.80 Max: 29.46
Current: 11.05
3.83
29.46
POCF 9.48
HLF's POCF is ranked higher than
63% of the 943 Companies
in the Global Household & Personal Products industry.

( Industry Median: 12.72 vs. HLF: 9.48 )
Ranked among companies with meaningful POCF only.
HLF' s POCF Range Over the Past 10 Years
Min: 2.82  Med: 10.35 Max: 19.1
Current: 9.48
2.82
19.1
EV-to-EBIT 11.10
HLF's EV-to-EBIT is ranked higher than
69% of the 1409 Companies
in the Global Household & Personal Products industry.

( Industry Median: 15.92 vs. HLF: 11.10 )
Ranked among companies with meaningful EV-to-EBIT only.
HLF' s EV-to-EBIT Range Over the Past 10 Years
Min: 3.1  Med: 9.80 Max: 15.2
Current: 11.1
3.1
15.2
EV-to-EBITDA 9.60
HLF's EV-to-EBITDA is ranked higher than
64% of the 1464 Companies
in the Global Household & Personal Products industry.

( Industry Median: 12.09 vs. HLF: 9.60 )
Ranked among companies with meaningful EV-to-EBITDA only.
HLF' s EV-to-EBITDA Range Over the Past 10 Years
Min: 2.6  Med: 8.60 Max: 13.2
Current: 9.6
2.6
13.2
PEG 1.06
HLF's PEG is ranked higher than
74% of the 555 Companies
in the Global Household & Personal Products industry.

( Industry Median: 2.21 vs. HLF: 1.06 )
Ranked among companies with meaningful PEG only.
HLF' s PEG Range Over the Past 10 Years
Min: 0.15  Med: 0.66 Max: 1.34
Current: 1.06
0.15
1.34
Shiller P/E 22.66
HLF's Shiller P/E is ranked higher than
62% of the 253 Companies
in the Global Household & Personal Products industry.

( Industry Median: 29.23 vs. HLF: 22.66 )
Ranked among companies with meaningful Shiller P/E only.
HLF' s Shiller P/E Range Over the Past 10 Years
Min: 12.1  Med: 20.69 Max: 37.7
Current: 22.66
12.1
37.7
Current Ratio 1.22
HLF's Current Ratio is ranked lower than
66% of the 1426 Companies
in the Global Household & Personal Products industry.

( Industry Median: 1.62 vs. HLF: 1.22 )
Ranked among companies with meaningful Current Ratio only.
HLF' s Current Ratio Range Over the Past 10 Years
Min: 1  Med: 1.31 Max: 2.15
Current: 1.22
1
2.15
Quick Ratio 0.94
HLF's Quick Ratio is ranked lower than
56% of the 1424 Companies
in the Global Household & Personal Products industry.

( Industry Median: 1.05 vs. HLF: 0.94 )
Ranked among companies with meaningful Quick Ratio only.
HLF' s Quick Ratio Range Over the Past 10 Years
Min: 0.66  Med: 0.96 Max: 1.79
Current: 0.94
0.66
1.79
Days Inventory 140.32
HLF's Days Inventory is ranked lower than
83% of the 1452 Companies
in the Global Household & Personal Products industry.

( Industry Median: 65.11 vs. HLF: 140.32 )
Ranked among companies with meaningful Days Inventory only.
HLF' s Days Inventory Range Over the Past 10 Years
Min: 103.75  Med: 119.09 Max: 151.31
Current: 140.32
103.75
151.31
Days Sales Outstanding 7.32
HLF's Days Sales Outstanding is ranked higher than
90% of the 1152 Companies
in the Global Household & Personal Products industry.

( Industry Median: 39.42 vs. HLF: 7.32 )
Ranked among companies with meaningful Days Sales Outstanding only.
HLF' s Days Sales Outstanding Range Over the Past 10 Years
Min: 5.71  Med: 10.01 Max: 12.08
Current: 7.32
5.71
12.08
Days Payable 30.91
HLF's Days Payable is ranked lower than
64% of the 1071 Companies
in the Global Household & Personal Products industry.

( Industry Median: 43.86 vs. HLF: 30.91 )
Ranked among companies with meaningful Days Payable only.
HLF' s Days Payable Range Over the Past 10 Years
Min: 26.89  Med: 30.48 Max: 38.38
Current: 30.91
26.89
38.38

Valuation & Return

vs
industry
vs
history
Price/Projected FCF 0.84
HLF's Price/Projected FCF is ranked higher than
78% of the 783 Companies
in the Global Household & Personal Products industry.

( Industry Median: 1.53 vs. HLF: 0.84 )
Ranked among companies with meaningful Price/Projected FCF only.
HLF' s Price/Projected FCF Range Over the Past 10 Years
Min: 0.46  Med: 1.01 Max: 1.93
Current: 0.84
0.46
1.93
Price/DCF (Earnings Based) 0.57
HLF's Price/DCF (Earnings Based) is ranked higher than
95% of the 121 Companies
in the Global Household & Personal Products industry.

( Industry Median: 1.61 vs. HLF: 0.57 )
Ranked among companies with meaningful Price/DCF (Earnings Based) only.
N/A
Price/Median PS Value 0.96
HLF's Price/Median PS Value is ranked higher than
69% of the 1577 Companies
in the Global Household & Personal Products industry.

( Industry Median: 1.14 vs. HLF: 0.96 )
Ranked among companies with meaningful Price/Median PS Value only.
HLF' s Price/Median PS Value Range Over the Past 10 Years
Min: 0.32  Med: 0.94 Max: 1.76
Current: 0.96
0.32
1.76
Price/Peter Lynch Fair Value 1.36
HLF's Price/Peter Lynch Fair Value is ranked higher than
59% of the 288 Companies
in the Global Household & Personal Products industry.

( Industry Median: 1.64 vs. HLF: 1.36 )
Ranked among companies with meaningful Price/Peter Lynch Fair Value only.
HLF' s Price/Peter Lynch Fair Value Range Over the Past 10 Years
Min: 0.19  Med: 0.64 Max: 1.24
Current: 1.36
0.19
1.24
Earnings Yield (Greenblatt) (%) 9.00
HLF's Earnings Yield (Greenblatt) (%) is ranked higher than
75% of the 1729 Companies
in the Global Household & Personal Products industry.

( Industry Median: 5.10 vs. HLF: 9.00 )
Ranked among companies with meaningful Earnings Yield (Greenblatt) (%) only.
HLF' s Earnings Yield (Greenblatt) (%) Range Over the Past 10 Years
Min: 6.6  Med: 10.20 Max: 32.1
Current: 9
6.6
32.1
Forward Rate of Return (Yacktman) (%) 18.93
HLF's Forward Rate of Return (Yacktman) (%) is ranked higher than
83% of the 724 Companies
in the Global Household & Personal Products industry.

( Industry Median: 3.08 vs. HLF: 18.93 )
Ranked among companies with meaningful Forward Rate of Return (Yacktman) (%) only.
HLF' s Forward Rate of Return (Yacktman) (%) Range Over the Past 10 Years
Min: 18.7  Med: 25.35 Max: 40.9
Current: 18.93
18.7
40.9

More Statistics

Revenue (TTM) (Mil) $4,483
EPS (TTM) $ 4.16
Beta1.36
Short Percentage of Float44.00%
52-Week Range $42.26 - 72.22
Shares Outstanding (Mil)92.80

Analyst Estimate


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Dec16 Dec17
Revenue (Mil $) 4,589 4,876
EPS ($) 4.70 5.51
EPS w/o NRI ($) 4.70 5.51
EPS Growth Rate
(3Y to 5Y Estimate)
N/A
Dividends Per Share ($)
» More Articles for HLF

Headlines

Articles On GuruFocus.com
The Battle of the Billionaire Gurus – and the Future of Herbalife Jul 25 2016 
Bill Ackman Comments on Herbalife in 2nd Quarter Conference Call Jul 20 2016 
The Herbalife Rorschach Test Jul 18 2016 
Pershing Square's Statement Regarding Herbalife Jul 18 2016 
Learn from Bill Ackman’s Mistakes Jul 18 2016 
Herbalife: FTC Settlement Spells Trouble Jul 18 2016 
Herbalife Increases Carl Icahn's Ownership Limit Jul 15 2016 
Bill Ackman's Herbalife Settles with FTC, Stock Is Undervalued Jul 15 2016 
Bill Ackman's Herbalife Settles with FTC, Stock Is Undervalued Jul 15 2016 
Bill Ackman: Herbalife Bilking People, NBC Helping Valeant Short-Seller Make Money Jul 14 2016 

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Did Bill Ackman Make the Right Decision Shorting Herbalife? Jul 26 2016
The Battle of the Billionaire Gurus - and the Future of Herbalife Jul 25 2016
Ackman's Bad Bets Costs $600 Million in Redemptions Jul 24 2016
[$$] Icahn's Herbalife Ownership Limit Raised Jul 22 2016
Bill Ackman Vs. Herbalife: The Saga Continues... Jul 21 2016
Ackman still believes Herbalife’s business will disappear Jul 21 2016
Bill Ackman Comments on Herbalife in 2nd Quarter Conference Call Jul 20 2016
Bill Ackman Says Herbalife's Business Model on Track to 'Disappear' Jul 20 2016
Bill Ackman Just Accused Carl Icahn of Stock Fraud Jul 20 2016
Bill Ackman Claims Herbalife 'Will Not Survive' Jul 20 2016
Herbalife Issues Statement Jul 20 2016
Herbalife 'Will Not Survive' New FTC Regulations, Bill Ackman Says Jul 20 2016
Herbalife responds to Ackman call Jul 20 2016
Bill Ackman's getting stomped, but man did his conference call sound like a victory lap Jul 20 2016
Why Ackman Plans to Maintain Bet Against Herbalife Jul 20 2016
Why Ackman Plans to Maintain Bet Against Herbalife Jul 20 2016
Pershing Square’s Ackman Says 1H Redemptions Relatively Low Jul 20 2016
Ackman fights back Jul 20 2016
Ackman to Push Herbalife (HLF) Foreign Investigation, Bloomberg Says Jul 20 2016

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