We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
What's in Store for Herbalife (HLF) this Earnings Season?
Read MoreHide Full Article
Herbalife Ltd(HLF - Free Report) is set to report second-quarter 2016 results on Aug 3 after market close. Last quarter, it posted a positive earnings surprise of 29.35%.
In fact, this weight management and nutritional products company has managed to beat estimates in the last four quarters, generating an average positive earnings surprise of 21.93%.
Let's see how things are shaping up for this announcement.
Factors to Consider this Quarter
Herbalife expects sales to be flat to up 3% and volume growth in the range of 1.5% to 4.5% in second-quarter 2016. On a currency adjusted basis (excluding the impact of Venezuela price increases tied to foreign exchange rate movements), sales are expected to increase 5.5% - 8.5%.
For the second quarter, the company expects adjusted earnings per share in a range of $1.10 - $1.20 per share, which includes an unfavorable currency impact of approximately 20 cents per share. Excluding the currency impact (excluding the impact of Venezuela price increases tied to foreign exchange rate movements), adjusted earnings are expected in a range of $1.30 to $1.40 per share.
We note that the company is witnessing volume improvement in key markets including the U.S., Mexico and Brazil, as a result of strategic decisions taken to improve the business and tremendous leadership by all the senior sales leaders. The company anticipates that these important and effective changes will lead to volume growth in the to-be-reported quarter.
However, unfavorable currency is also a major headwind for the company and will hurt earnings in the to-be reported quarter.
Nevertheless, the outcome of the U.S. Federal Trade Commission (‘FTC’) probe, which says that the company is not a pyramid scheme, is a positive. This has boosted investors’ confidence as the company has been the target of activist investor William Bill Ackman, hedge fund manager of Pershing Square Capital Management since Dec 2012. Ackman accused the company of running a pyramid scheme business model, in which profits are largely derived from recruiting new distributors and not from selling products. Such models are illegal because they eventually collapse once there are no more people to recruit. He also launched his $1 billion short position in Herbalife shares in 2012.
Our proven model does not conclusively show that Herbalife is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP for Herbalife is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate stand at $1.17 per share.
Zacks Rank: Herbalife has a Zacks Rank #3. Although this increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Stocks in the consumer staples sector that have both a positive earnings ESP and a favorable Zacks Rank are:
Omega Protein Corp. with an Earnings ESP of +2.13% and a Zacks Rank #1.
Tyson Foods, Inc. (TSN - Free Report) with an Earnings ESP of +0.94% and a Zacks Rank #3.
Post Holdings, Inc. (POST - Free Report) with an Earnings ESP of +12.5% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
What's in Store for Herbalife (HLF) this Earnings Season?
Herbalife Ltd(HLF - Free Report) is set to report second-quarter 2016 results on Aug 3 after market close. Last quarter, it posted a positive earnings surprise of 29.35%.
In fact, this weight management and nutritional products company has managed to beat estimates in the last four quarters, generating an average positive earnings surprise of 21.93%.
Let's see how things are shaping up for this announcement.
Factors to Consider this Quarter
Herbalife expects sales to be flat to up 3% and volume growth in the range of 1.5% to 4.5% in second-quarter 2016. On a currency adjusted basis (excluding the impact of Venezuela price increases tied to foreign exchange rate movements), sales are expected to increase 5.5% - 8.5%.
For the second quarter, the company expects adjusted earnings per share in a range of $1.10 - $1.20 per share, which includes an unfavorable currency impact of approximately 20 cents per share. Excluding the currency impact (excluding the impact of Venezuela price increases tied to foreign exchange rate movements), adjusted earnings are expected in a range of $1.30 to $1.40 per share.
We note that the company is witnessing volume improvement in key markets including the U.S., Mexico and Brazil, as a result of strategic decisions taken to improve the business and tremendous leadership by all the senior sales leaders. The company anticipates that these important and effective changes will lead to volume growth in the to-be-reported quarter.
However, unfavorable currency is also a major headwind for the company and will hurt earnings in the to-be reported quarter.
Nevertheless, the outcome of the U.S. Federal Trade Commission (‘FTC’) probe, which says that the company is not a pyramid scheme, is a positive. This has boosted investors’ confidence as the company has been the target of activist investor William Bill Ackman, hedge fund manager of Pershing Square Capital Management since Dec 2012. Ackman accused the company of running a pyramid scheme business model, in which profits are largely derived from recruiting new distributors and not from selling products. Such models are illegal because they eventually collapse once there are no more people to recruit. He also launched his $1 billion short position in Herbalife shares in 2012.
HERBALIFE LTD Price and EPS Surprise
HERBALIFE LTD Price and EPS Surprise | HERBALIFE LTD Quote
Earnings Whispers?
Our proven model does not conclusively show that Herbalife is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP for Herbalife is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate stand at $1.17 per share.
Zacks Rank: Herbalife has a Zacks Rank #3. Although this increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Stocks in the consumer staples sector that have both a positive earnings ESP and a favorable Zacks Rank are:
Omega Protein Corp. with an Earnings ESP of +2.13% and a Zacks Rank #1.
Tyson Foods, Inc. (TSN - Free Report) with an Earnings ESP of +0.94% and a Zacks Rank #3.
Post Holdings, Inc. (POST - Free Report) with an Earnings ESP of +12.5% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>