) reached a 52-week high of $76.65 on Tuesday, Dec 3, 2013 after
a Belgian court ruled in favor of the company.
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The company had been facing accusations from hedge fund manager
William Ackman and Belgian consumer organization Test-Aankoop
regarding its pyramid scheme business model i.e. deceptive
marketing practices employed for improving business. Per the
accusation, through such a scheme, the company earns most of its
money by recruiting new sales people and not from the products
that they sell. However, the court quashed the allegations and
stated that the company's sales model complied with Belgian law.
Moreover, since its impressive third quarter earnings call on Oct
28, 2013, the company's share price edged up 13.4%. Earnings
surpassed the Zacks Consensus Estimate of $1.14 by 23.68%.
Revenues also beat the Zacks Consensus Estimate of $1,195 million
by 1.59%. The company posted a positive four quarter average
earnings surprise of 15.46%.
With 13.0% volume growth in the quarter, we believe that solid
demand for its products (especially weight management products),
product innovations and numerous growth strategies will drive the
stock going forward.
Herbalife is a global nutrition company that sells weight
management products, nutritional supplements, energy, sports and
fitness and personal care products worldwide. Herbalife offers
its products through retail stores, sales representatives, sales
officers and independent service providers.
The company presently has a short-term Zacks Rank #2 (Buy). Some
other stocks worth considering in the sector include
Best Buy Co., Inc.
). While Quiksilver Inc. holds a Zacks Rank #1 (Strong Buy),
Walgreen Co. and Best Buy Co. carry a Zacks Rank #2 (Buy).