Strong performance in 2017
Herbalife (HLF) stock had a strong run in 2017. To be precise, the company’s stock soared 40.7% in 2017, getting a boost from the increase in stake by activist investor Carl Icahn in the first quarter.
Herbalife’s announcement to buy back $600 million in its own shares in August 2017 also supported the upward trend in the stock.
Herbalife stock outperformed the benchmark index (SPX), which rose 19.4% during the same period. Peers Usana Health Sciences (USNA) and Nu Skin Enterprises (NUS) reported strong growth in 2017 as well, rising 21.0% and 42.8%, respectively, while Vitamin Shoppe (VSI) stock nosedived during the same period and eroded a substantial portion of its investors’ wealth.
What to expect
Herbalife stock is likely to benefit from a return to growth in 2018. The company’s management expects its sales and EPS (earnings per share) to return to the growth trajectory as volume trends improve in the US (SPY) and Brazil and the market stabilizes in China (FXI).
Meanwhile, pressure on margins from rising input costs due to adverse currency movement is anticipated to subside, which should boost its profitability. Share repurchases could also support bottom-line growth.
Herbalife’s persisting challenges include declines in volume points in the US, China, South America, and Central America and tough YoY (year-over-year) comparables during the first quarter of 2018, and these are expected to hurt the company’s near-term financials.