Company Spotlight - Herbalife: |  - Co. Spotlights available via RSS feed
| Healthy In Body And Bottom Line |  
|
| | HLF | $44.28 | The Good: Great global reach.
The Bad: Debt is twice equity on the balance sheet.
The Beautiful: China sales up 100% in 2007. | P/E | 14 | | PSR | 1.3 | | ROE | n/m | | Debt/Eq. | 2.0 | | Div. Yield | 1.8% |
May 8, 2008 - Herbalife, Ltd. (HLF-NYSE) manufactures and distributes weight control products including meal replacements, snacks and "enhancers". The company also offers nutritional supplements, energy drinks, and skin care products. The company has international subsidiaries in more than 60 countries. Herbalife's multi-level marketing program involves more than 1.7 million independent distributors throughout the world.
Earnings are outperforming sales. While revenues increased 14% in 2007, earnings rang up a 37% improvement. Analysts don't see anything that will change this pattern. Total sales in 2007 were $2.145 billion, up from $1.88 billion in 2006. This year look for $2.4 billion and $2.64 billion next. Earnings were $2.63 last year, up from $1.62 in 2006. Analysts predict $3.30 this year and $3.85 next. Over the next 5 years, they're seeing sales ramp by 9.5% a year, on average, while the bottom line grows by 18% a year, on average. There's a perfect storm of goodness coming at HLF. With established and new products, a large global distribution capability, and an ever increasing awareness of health and fitness, the company is delivering the right products at the right time to an ever larger customer base. Chinese sales alone were up 100% in 2007. HLF opened 90 retail locations in 29 provinces with more licenses being negotiated to further penetrate behind the Great Wall. South American sales are also growing in the triple digits. In its most recent company presentation in the lower continent, over 20,000 people attended, up from 2500 only 2 years ago. New marketing efforts include sponsorship of American Youth Soccer Organization, putting the company name on more than a million jerseys on 80,000 teams. Part of the agreement is for the company to supply samples of health shakes, hydration drinks and protein bars. This will make a younger generation aware of its products and create new demand. The salesforce for this new group may come from soccer moms looking for flexible part-time work. More numbers: The stock went public in 2004 after going private in 2002. Debt is 66% of total capital. Return on Equity is projected to be 44% next year. There's a dividend of 80 cents annually for a return of 1.8%. Net profit margin was 8.9% last year, expected to be 9.3% this year and 10.2% next year. The stock has done very well, going from a low of $14 in 2004 to a high of $51.10 recently. It's performed well during the last 7 months while the market in general has been hit. The company serves a growing market, and it isn't dependent on any one country or economy for success. - Company Web site: www.herbalife.com - Ted Allrich |
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