Herbalife (HLF) Up on Higher Earnings, Guidance
Shares of Herbalife Ltd (HLF: Charts, News) closed up +1.00 or +2.58 percent to $39.74 per share on Tuesday before the company announced fourth quarter earnings results which beat Wall Street analyst expectations. Herbalife also raised its outlook for 2013 earnings.
In after hours trading, the stock was down -0.39 or -0.98 percent to $39.35 per share. Herbalife has been in the middle of a feud between hedge fund managers Carl Icahn and Bill Ackman. Icahn announced Tuesday that he held a 13 percent stake in the company and believes Herbalife is a good investment, while Ackman thinks the stock is no more than a Ponzi scheme, stating last month that, "We believe this is a company causing enormous harm to millions of people and has done so over a very long period of time." Daily Chart
Founded in 1980, Los Angeles, California based Herbalife Ltd is a multi-level marketing company selling skin care and weight loss products in 87 countries through a network of 2.7 million independent agents. The company's product line includes energy and fitness supplements, protein snacks and shakes and personal skin care products. After the market close on Tuesday the company reported earnings of $117.8 million, or $1.05 a share in the fourth quarter, versus earnings of $105.4 million, or 86 cents a share in the same period one year ago. The Wall Street analyst consensus was for earning of $1.03 per share. Revenue was also higher, increasing almost 20 percent to $1.06 billion from $884.6 million in 2011's fourth quarter. The rise in revenue was largely attributed to increased sales in the Asia Pacific market. For the twelve months ended on December 31st, 2012, Herbalife reported record net sales of $4.1 billion, an 18 percent rise on 20 percent growth in volume. The company reported net income of $477.2 million or $4.05 per diluted share, versus $412.6 million or $3.30 per diluted share for 2011. In the press release after the earnings release, Michael O. Johnson, Herbalife's chairman and CEO stated that, "Herbalife continues to deliver record results in sales and profitability as our independent distributors go deeper into existing markets, developing more and more customers using our nutrition products every day," he continued, "Obesity and poor nutrition are global public health problems. Our distributors are proud to be part of the solution." Herbalife also raised its 2013 EPS guidance to $4.45 to $4.65, compared with the Wall Street analyst consensus of $4.64. Sales are expected to rise 12 to 14 percent. For the first quarter of 2013, Herbalife expects to see earnings per share of $1.03 - $1.07 with a 15 to 17 percent rise in sales; analysts were expecting earnings per share of $1.06. Herbalife stock dropped to $26.06 per share in December after comments from Pershing Square fund manager Bill Ackman said the company was nothing more than a "pyramid scheme." Ackman has put his money where his mouth, shorting about $1 billion of the stock. Also, Herbalife disclosed after the comments that the SEC's enforcement division had requested information on the company's financial operations. With the stock having traded in the low 70s in April of 2012, the stock could go either way in the coming months. Nevertheless, if earnings continue to improve, the stock could see further upside. Other News About HLF Icahn, Others Acquire Stakes in Herbalife, Taking on Ackman
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Published on Feb 20, 2013
By Jay Hawk