Back to top

Will Herbalife (HLF) Stock Continue With Its Solid Bull Run?

Read MoreHide Full Article

Herbalife Nutrition Ltd. (HLF - Free Report) has delivered a marvellous bull-run in the past six months. This nutrition solutions provider has seen its shares rally 53.2%, against the industry’s decline of nearly 3%. Let’s delve into the factors that are most likely to continue driving this Zacks Rank #2 (Buy) company.



Seed-to-Feed Strategy

Herbalife remains committed toward its seed-to-feed strategy. This includes making considerable investments in quality check, product testing, scientific workforce and expanding the level of self-production in the company’s premium products. The seed-to-feed strategy is based on using superior ingredients along with vertical solid quality manufacturing of Herbalife’s most renowned products. Further, it involves checking the finished products for label claim and purity, and efficiently delivering these products to members and their customers. To this end, Herbalife remains committed to resonating with evolving consumption trends and offering increased product access points near its members and their customers.

Investments to Enhance Direct Selling

Herbalife has been gaining from its direct-selling network. Management believes that offering one-on-one personalised services acts as a major sales driver in case of nutritional products, especially products related to weight-management. Thus, the company continues to make investments in technology (deal with Salesforce.com), education and training to help distributors enrich their services to customers. Markedly, distributors are an exclusive point of difference for Herbalife, as it helps the company stand apart, and get a competitive edge over traditional and online retailing of nutritional products. These factors along with Herbalife’s robust brand portfolio and geographic spread fuelled the company in the first quarter of 2018, alongside encouraging management to raise view.

Solid Q1 & Outlook, U.S Volumes Up

Herbalife delivered first-quarter 2018 results, wherein both top and bottom lines increased year over year and marked their second consecutive beat. While earnings were driven by robust sales and tax gains, sales were backed by contributions from new products and strength across most regions, apart from China. Also, U.S. volumes returned to growth, ahead of plans.  Though volumes in North America rose just 0.2% year over year, it fares much better than declines witnessed in the past few quarters. Clearly, management’s efforts to keep pace with consumers’ preferences and its effective direct-selling strategy are paying off. Encouragingly, the company expects these improved trends to continue in the second quarter and it expects U.S. volumes to be higher than expected throughout the year.

These factors along with the company’s continued focus on its growth strategies encouraged management to raise 2018 outlook. Herbalife now expects 2018 net sales to advance 9-13%, while volumes are expected to rise 3-7%. Further, management expects the bottom line in a range of $2.53-$2.73 per share (on a post-split basis).

All said, we expect Herbalife to keep its stellar show on and sustain the solid bull-run.

Looking for More? Check These Retail Stocks

Urban Outfitters (URBN - Free Report) , with a Zacks Rank #1 (Strong Buy), has seen positive estimate revisions in the past 30 days.You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores (BURL - Free Report) , a Zacks Rank #2 stock, has long-term earnings per share growth rate of 18.1%.

Dillard’s (DDS - Free Report) , with long-term earnings per share growth rate of 10.2%, carries a Zacks Rank #2.

The Hottest Tech Mega-Trend of All                 

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>              



More from Zacks Analyst Blog

You May Like