Herbalife Ltd. (HLF) 4Q Earnings Beat, Shares Rise 3% – ValueWalk Premium

Herbalife Ltd. (HLF) 4Q Earnings Beat, Shares Rise 3%

As Herbalife Ltd. (NYSE:HLF) awaited to announce its fourth quarter earnings, investors pushed the stock up 3% on Tuesday during regular trading hours. This was a sign of things to come as Herbalife Ltd. (NYSE:HLF) reported its fourth-quarter earnings beat estimates; it also increased its sales guidance.

Herbalife Ltd. (HLF) 4Q Earnings Beat, Shares Rise 3%

According to it quarterly earnings press release, Herbalife Ltd. (NYSE:HLF) reported a net income of $117.8 million ($1.05 EPS). This compares to the previous year's $105.4 million ($0.86 EPS). Sales increased 20 percent to $1.1 billion from the previous year with volume point growth at 18 percent.

Analysts had estimated $1.03 per share earnings from $1.049 billion sales, reported Bloomberg.

In the earnings release, Michael O. Johnson, Herbalife’s chairman and CEO said, “Herbalife continues to deliver record results in sales and profitability as our independent distributors go deeper into existing markets, developing more and more customers using our nutrition products every day. Obesity and poor nutrition are global public health problems. Our distributors are proud to be part of the solution.”

The company also raised its FY 13 earnings per share guidance to a $4.45 to $4.65 range.

For the twelve months ended December 31, 2012, the company saw record net sales of $4.1 billion, an 18 percent rise on 20 percent volume growth as compared to 2011. For the same period, the company reported net income of $477.2 million ($4.05 per diluted share). This represented a 16 percent and 23 percent increase, respectively, as compared to 2011's $412.6 million ($3.30 per diluted share) results.

For the year ended December 31, 2012 the company saw cash flow from operations at $567.8 million, an 11 percent rise as compared to 2011. It paid dividends ($0.30 per share) of $135.1 million and invested $122.8 million in capital expenditures. Herbalife Ltd. (NYSE:HLF) also repurchased $527.8 million in common shares outstanding under the company's share repurchase program.

The news comes after hedge fund giants have recently been active in the stock.

On the short side, there's Bill Ackman, the CEO of Pershing Square Capital Management. He has publicly said he's shorting 20 million shares-plus of Herbalife Ltd. (NYSE:HLF) at a $0 price target. This comes on Ackman's thesis that Herbalife is a pyramid scheme and regulators will review the company.

He put together a list of nearly 300 questions to Herbalife's management but analysts do not expect them to answer them.

Herbalife Ltd. (NYSE:HLF) has denied Ackman's accusations and has said he utilized “outdated” and “inaccurate information” for the questions.

Then there's the long investors.

Daniel Loeb, Third Point LLC founder, revealed last month that he as 8.24% stake in Herbalife. The position has been cut recently, but he is still a large shareholder in the company.

Enter player No. 3: billionaire investor Carl Ichan. A rival of Ackman, he has a 12.98% stake in Herbalife Ltd. (NYSE:HLF); this also includes shares in from underlying call options.

That's it for Tuesday's news but the company will hold its conference call on Wednesday, February 20, 2013 at 8 a.m. PST (11 a.m. EST). In after-hours trading, Herbalife Ltd. (NYSE:HLF) stock is trading at $40.10, up 0.91 percent.


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