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Herbalife Crushed 4Q17 Earnings Estimate, Marking 29% Growth

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What drove Herbalife’s EPS

Herbalife (HLF) reported better-than-expected 4Q17 EPS (earnings per share) on Thursday, February 22, 2018. Its 4Q17 adjusted EPS was $1.29, handily surpassing analysts’ estimate of $0.96 and increasing 29% on a YoY (year-over-year) basis.

The company’s top line returned to growth due to strong performances in China and the EMEA (Europe, the Middle East, and Africa), which supplemented the bottom-line growth. Improved pricing, favorable currency rates, and lower costs due to the timing shift of promotions and events in 3Q17 from 4Q17 further boosted the company’s bottom-line results.

Also, a lower adjusted effective tax rate positively impacted the company’s bottom line, which came in above its guidance range of $0.84–$1.04.

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In comparison, the company’s peers Nu Skin Enterprises (NUS) and Usana Health Sciences (USNA) reported double-digit growth in their bottom lines in 4Q17 and surpassed analysts’ expectations. However, Vitamin Shoppe’s (VSI) bottom line is expected to remain weak, with analysts expecting it to report a loss in 4Q17.

Outlook

Herbalife expects its 1Q18 adjusted EPS to be $0.90–$1.10, reflecting a YoY decline when compared with adjusted EPS of $1.24 in 1Q17. Tough YoY comparisons in North America and China are expected to remain a drag on Herbalife’s 1Q18 results. For the full year, the company expects its bottom line to be $4.60–$5. The guidance includes an anticipated benefit of $0.13 per share from currency fluctuations.

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