Tags: Herbalife | global | growth | HLF

Herbalife: Exposure to Global Growth Trends

By    |   Wednesday, 07 Dec 2011 04:29 PM

The business of dietary and health supplement provider Herbalife (HLF), in the words of CEO Michael O. Johnson, “has never been stronger.” The company also provides investors with investment exposure to some hot global growth trends.

Herbalife markets weight management and nutritional products and supplements on a global basis through a network of independent marketers. The company claims more than 2 million independent distributors who sell company products in 75 countries. Of the 2 million plus distributors, about 230,000 are what the company calls “active sales leaders.”

Some of the global trends exploited by Herbalife:
  • Obesity: More than 60 percent of Herbalife sales are of the company's weight management products, with a 23 percent share of the global meal replacement business. Another quarter of revenues are from the sale of targeted nutritional supplements.
  • Emerging markets: At the end of the 2011 third quarter, emerging market countries accounted for 53 percent of revenue, and sales in those countries grew at a 25 percent rate. Established market sales are still growing at an attractive mid-teens rate.
  • Unemployment, underemployment: Herbalife, through its network marketing sales system, offers a path for the unemployed and underemployed to have their own business and earn an income. Third quarter records show the number of so-called active sales leaders among its distributors growing at more than a 20 percent rate, year-over-year.
For the first three quarters of 2011, Herbalife generated revenues of $2.57 billion, up from $2 billion for the same period of 2011. Net income for the nine months was $2.44 per share, up 44 percent from $1.69.

For the full year, the earnings estimate is $3.18 per share, compared to $2.38 earned in 2010. The consensus earnings estimate for 2012 is $3.50 per share.

In analyst actions on HLF, Auriga USA analysts recently initiated coverage with a hold rating. The analysts at Caris & Company initiated their coverage with a buy rating. Argus Capital analysts have reiterated their buy rating several times this year.

The company next reports on Feb. 22.

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The business of dietary and health supplement provider Herbalife (HLF), in the words of CEO Michael O. Johnson, has never been stronger. The company also provides investors with investment exposure to some hot global growth trends. Herbalife markets weight management and...
Herbalife,global,growth,HLF
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2011-29-07
Wednesday, 07 Dec 2011 04:29 PM
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