Trade-Ideas LLC identified Herbalife ( HLF) as a weak on high relative volume 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 $62.3 million.
  • HLF has traded 155,535 shares today.
  • HLF is trading at 3.88 times the normal volume for the stock at this time of day.
  • HLF is trading at a new low 3.04% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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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 2 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 1.2 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 1.37 and a short float of 48.8% with 21.51 days to cover. Shares are up 54.6% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Herbalife as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The gross profit margin for HERBALIFE LTD is rather high; currently it is at 55.04%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, HLF's net profit margin of 7.12% significantly trails the industry average.
  • Net operating cash flow has increased to $197.60 million or 25.91% when compared to the same quarter last year. Despite an increase in cash flow, HERBALIFE LTD's cash flow growth rate is still lower than the industry average growth rate of 36.75%.
  • HERBALIFE LTD's earnings per share declined by 25.9% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, HERBALIFE LTD reported lower earnings of $3.39 versus $4.91 in the prior year. This year, the market expects an improvement in earnings ($4.65 versus $3.39).
  • 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 significantly decreased by 30.7% when compared to the same quarter one year ago, falling from $119.53 million to $82.80 million.

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