NEW YORK (TheStreet) -- Herbalife (HLF - Get Report) will be under much scrutiny ahead of a presentation today by billionaire detractor Bill Ackman in China, where he plans to expose company documents obtained by a former employee that he claims will show Herbalife broke Chinese direct selling and multi-level marketing laws.
The webcast presentation is set for 2 p.m. ET.
Ackman and Herbalife have been in the news since a New York Times article came out yesterday accusing the hedge fund manager of shorting a billion dollars in Herbalife stock on the assumption that the nutrition and weight management producer would fail, and then using political leverage in Washington to ensure that it happened.
Herbalife has already responded to today's presentation with a spokeswoman for the company saying in an email alert, "Having failed to make his case on Wall Street, Bill Ackman took his fight to Washington, D.C., and the states. Now that those efforts to buy his way to an investigation have been exposed, he is going to China. We are confident in the strength of our consumption-based business model in China."
HLF data by YCharts
TheStreet Ratings team rates HERBALIFE LTD as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate HERBALIFE LTD (HLF) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 9.6%. Since the same quarter one year prior, revenues rose by 19.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 60.78% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HLF should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- HERBALIFE LTD has improved earnings per share by 15.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HERBALIFE LTD increased its bottom line by earning $4.91 versus $3.95 in the prior year. This year, the market expects an improvement in earnings ($6.00 versus $4.91).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Personal Products industry average, but is less than that of the S&P 500. The net income increased by 10.1% when compared to the same quarter one year prior, going from $112.21 million to $123.54 million.
- Net operating cash flow has increased to $195.89 million or 16.67% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -24.79%.
- You can view the full analysis from the report here: HLF Ratings Report