NEW YORK (TheStreet) -- Shares of Herbalife Ltd. (HLF - Get Report) are down -2.45% to $64.04 in heavy trading volume as Bill Keep, the business dean of the College of New Jersey and a trial expert on pyramid schemes, urged SEC Chairman Mary Jo White to conduct ongoing reviews of the growing MLM industry and recommended that companies submit their enforcement policies to regulators every five years, the New York Post reports.
The SEC should ratchet up its scrutiny of Herbalife and other multilevel marketing companies to ensure that their distributors aren't violating anti-pyramid scheme laws, Keep said.
In his letter to White, Keep called out Herbalife, which is being probed by the SEC and other regulators over pyramid scheme allegations, for its "attempts to distance the company from distributor behaviors," the Post said.
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 multiple strengths, 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 revenue growth, notable return on equity, solid stock price performance, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 0.1%. Since the same quarter one year prior, revenues rose by 12.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, HLF's share price has jumped by 36.55%, exceeding the performance of the broader market during that same time frame. 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.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Personal Products industry and the overall market, HERBALIFE LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has increased to $190.65 million or 38.52% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 8.43%.
- The gross profit margin for HERBALIFE LTD is rather high; currently it is at 51.55%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 5.91% trails the industry average.
- You can view the full analysis from the report here: HLF Ratings Report