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Have You Noticed Potential in Herbalife? Stock Adds 48% YTD

Shares of Herbalife Ltd. HLF have exhibited a bullish run on the index. This Zacks Rank #1 (Strong Buy) stock has surged 48.4% year to date, outperforming the Zacks categorized Retail–Drug Stores industry and the broader sector. Meanwhile, the industry declined 3.8% and the Zacks categorized Retail-Wholesale sector gained 13.6%. Notably, the current share price is also hovering to its 52-week high of $74.49.



Herbalife looks promising on its impressive earnings history, strong growth potential in China and solid brand portfolio of personal care and nutritional supplements. Let’s delve deep to explore more about this attractive stock.

What’s Leading Herbalife Higher?

Recently, Herbalife informed that 90% of the U.S. sales were documented purchases by consumers in May, which consisted of over three million receipted retail transactions because of its distributors’ commitment. Further, management said it outpaced the key threshold of 80% under its agreement with the U.S. Federal Trade Commission.

As a result, the company raised its earnings guidance for the second-quarter and full-year 2017. Herbalife now expects its adjusted earnings in the band of 95 cents–$1.15 for the second quarter that ends on Jun 30. Earlier, it had projected the same in the range of 85 cents–$1.05 and delivered $1.29 in the year-ago quarter. We note that one estimate has moved north for the upcoming second quarter of 2017 over the last 30 days. The Zacks Consensus Estimate has been favorable for the said quarter as the same increased 10 cents to $1.10.

For 2017, Herbalife estimates its adjusted earnings in the band of $4.10–$4.50 per share versus $4.05–$4.45, guided previously. In 2016, the company had posted adjusted earnings of $4.85. Currently, the Zacks Consensus Estimate is pegged at the higher end of the current guided range.
However, the company expects sales decline in the range of 2–6% from 0.5–4.5%, guided previously. Also, volumes are expected to decrease 4–8% compared with previous range of 1–5% for the second quarter. For 2017, Herbalife’s projected sales growth is 2.2%.

Impressive Earnings Streak

This leading nutrition company, which shares space with Walgreens Boots Alliance, Inc. WBA, Rite Aid Corporation RAD and CVS Health Corporation CVS, has reported better-than-expected earnings for 10 straight quarters of late. In the trailing four quarters, the company’s earnings have surpassed the Zacks Consensus Estimate with an average of 18.4%.

Herbalife Vs Industry

Other Developments

Herbalife has solid growth potential in China, where there is higher demand for nutritional products. Moving ahead, management remains optimistic on the volume growth in the respective market. Evidently, sales and volumes in China significantly exceeded expectations primarily owing to the positive timing of sales and volume resulting from an increase in price announced in Mar 2017.

In fact, China recorded volume growth of 17% in the first quarter. Additionally, this weight management company is witnessing volume improvement in key markets like the EMEA, Asia Pacific and Mexico, primarily backed by its marketing plan changes that were implemented in 2015.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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Rite Aid Corporation (RAD): Free Stock Analysis Report
 
CVS Health Corporation (CVS): Free Stock Analysis Report
 
Herbalife LTD. (HLF): Free Stock Analysis Report
 
Walgreens Boots Alliance, Inc. (WBA): Free Stock Analysis Report
 
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