Stock To Watch: Herbalife (HLF) In Perilous Reversal
Trade-Ideas LLC identified
(
) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Herbalife as such a stock due to the following factors:
- HLF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $291.7 million.
- HLF has traded 596,312 shares today.
- HLF is down 3.1% today.
- HLF was up 9.9% yesterday.
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More details on HLF:
Herbalife Ltd., a nutrition company, develops and sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products, and personal care products. HLF has a PE ratio of 18. Currently there are no analysts that rate Herbalife a buy, no analysts rate it a sell, and 2 rate it a hold.
The average volume for Herbalife has been 1.4 million shares per day over the past 30 days. Herbalife has a market cap of $5.5 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.36 and a short float of 44.9% with 4.70 days to cover. Shares are up 21.7% year-to-date as of the close of trading on Friday.
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Analysis:
rates Herbalife as a
. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins, solid stock price performance, impressive record of earnings per share growth and increase in net income. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the ratings report include:
- 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.
- The gross profit margin for HERBALIFE LTD is rather high; currently it is at 55.24%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 8.55% is above that of the industry average.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- HERBALIFE LTD has improved earnings per share by 21.7% 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 year. We feel that this trend should continue. During the past fiscal year, HERBALIFE LTD increased its bottom line by earning $3.96 versus $3.39 in the prior year. This year, the market expects an improvement in earnings ($4.82 versus $3.96).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Personal Products industry average. The net income increased by 22.5% when compared to the same quarter one year prior, going from $78.20 million to $95.80 million.
- You can view the full Herbalife Ratings Report.
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