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Bear Of The Day: Herbalife (HLF)

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Herbalife (HLF - Free Report) is a Zacks Rank #5 (Strong Sell) but it could be worth a deeper after a -16% and -10% move on back to back days.  This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.


Herbalife is a global network marketing company offering a range of science-based weight management products, nutritional supplements and personal care products intended to support weight loss and a healthy lifestyle.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of HLF, I three beats of the  Zacks Consensus Estimate and one miss.  This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For HLF I see annual estimates moving lower.

The current fiscal year consensus number moved from $3.39  to $2.24 over the last 60 days.

The next year has moved from $4.24 to $2.30.

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a majority of stocks in the Zacks universe are seeing negative earnings estimate revisions.  That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).

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