NEW YORK (TheStreet) -- Shares of Herbalife Ltd. (HLF) are climbing higher by 5.83% to $55.52 in mid-morning trading on Monday, after the company announced, late Friday afternoon, that it has agreed to settle a class action lawsuit brought against it in 2013.
The global nutrition company is denying any liability "or wrong doing and still asserts that the suit has no merit."
"The company notes that the plaintiffs' counsel acknowledge that a finder of fact could reasonably conclude there is substantial demand for Herbalife product and Herbalife is not in violation of the law," Herbalife said.
Watch the video below for more on Herbalife's $15 million settlement:
The company agreed to pay $15 million in order to settle the lawsuit brought on by a former California distributor of Herbalife's nutrition products that claimed the company's business model was really a "pyramid scheme," which kept him from making a profit, Bloomberg reported.
Additionally, Herbalife is scheduled to report its third quarter earnings results after the close today, and analysts polled by FactSet are expecting the company to post earnings of $1.51 per share. For the 2013 third quarter Herbalife reported adjusted earnings per share of $1.41.
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 11.3%. 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 ($6.25 versus $4.91).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Personal Products industry. 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