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Herbalife Beats Q3 Estimates and Reports Robust Growth

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Quarter in brief

Herbalife stock (HLF) rose 1.6% in after-hours trading following the company’s robust third-quarter results on October 30. Herbalife sustained its strong sales and earnings growth momentum. During the third quarter, the company’s sales marked double-digit growth and surpassed analysts’ expectations, reflecting a strong performance across several regions, primarily Asia-Pacific, North America, and China. Also, sales in Mexico continued to grow, which is encouraging for the company.

Driven by the company’s strong top-line performance, its bottom line recorded stellar YoY growth and handily exceeded analysts’ estimates. However, adverse currency rates remained a drag.

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For the fourth quarter, analysts expect the company’s top line to continue to grow led by new product launches. However, its EPS could remain low when compared with the prior year. Herbalife expects its adjusted EPS to be in the range of $0.50–$0.60 compared to the adjusted EPS of $0.65 it reported during the fourth quarter of 2017.

Management expects currency rates to be a significant drag on sales and could hurt its earnings growth rate. Its fourth-quarter net sales are projected to grow by 6.5%–10.5%, which includes a negative impact of approximately 500 basis points from unfavorable currency rates.

Herbalife stock outperformed

Herbalife stock has had a solid run so far this year and has outperformed the broader markets. Herbalife stock is up 61.5% on a YTD basis as of October 30. In comparison, the S&P 500 Index remained flat.

Meanwhile, stocks of other nutritional and dietary supplement manufacturers including Vitamin Shoppe (VSI) and Usana Health Sciences (USNA) also marked exceptional growth and are up 84.5% and 57.7%, respectively, on a YTD basis.

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