Why Herbalife (HLF) Stock Is Up in After-Hours Trading Today

NEW YORK (TheStreet) -- Shares of Herbalife  (HLF) were up 1.67% to $40.88 in after-hours trading Monday after the stock plunged in late afternoon trading on speculation that billionaire activist investor Carl Icahn would liquidate his position in the company.

TheStreet's Doug Kass tweeted late Monday afternoon that there was some unconfirmed chatter about Icahn's selling his stock in the nutrition and weight management company. The speculation sent Herbalife below $39 for the first time since August 2013.

But Fox Business Network's Charlie Gasparino tweeted after the market closed that Icahn had not sold any shares and had no option position either, and the stock rebounded slightly after hours.

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Herbalife closed down 10.31% to $40.21 on Monday. More than 4.9 million shares changed hands, nearly double the average volume of 2,597,020.

Separately, TheStreet Ratings team rates HERBALIFE LTD as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate HERBALIFE LTD (HLF) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.7%. Since the same quarter one year prior, revenues slightly increased by 7.1%. 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.
  • The gross profit margin for HERBALIFE LTD is rather high; currently it is at 52.19%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.15% is above that of the industry average.
  • HERBALIFE LTD' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($6.28 versus $4.91).
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Personal Products industry average. The net income has decreased by 16.5% when compared to the same quarter one year ago, dropping from $143.16 million to $119.53 million.
  • Net operating cash flow has decreased to $156.93 million or 26.60% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: HLF Ratings Report

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