Stock Buy: Herbalife, Inc.

Herbalife, Inc. (HLF: 48.95 0.00 0.00%) is once again pressuring its all-time high at $53 after rebounding from a key trend line in early June. In spite of the upward momentum, this Zacks #2 rank stock still trades at a discount to the industry average with a forward P/E of just 13X.

First-Quarter Results

 

Shares of HLF set the recent all-time high after the company reported better than expected Q1 results on May 3. Revenue for the period was up 19% from last year to $619 million. Earnings also came in strong at 98 cents, 15% ahead of the Zacks Consensus Estimate. Herbalife now has an average earnings surprise of 21% over the last four quarters.

Although Herbalife's sales out of China don't represent a huge portion of the company's total revenue, the region is seeing big gains, with sales up 23% from last year to $26 million. North American sales were also strong, up 18% from last year to $220 million

 

When excluding a one-tie charge on accounting regulations in Venezuela, the company's operating margin also gained, climbing 210 basis points to 14.2%.

Nice Balance Sheet

 

Herbalife also moved to strengthen its already solid balance sheet, with its cash and equivalents up $15 million from last quarter to $165 million. After paying off $17 million in debt, its net debt position stands at $82 million.

Estimates

Analysts were encouraged by the solid quarterly results, with the current year adding 15 cents to $3.90 and the next year adding 12 cents to $4.37.

Valuation

In spite of the recent gains, HLF still has value, trading with a forward P/E multiple of 13X compared to the industry average of 15X.

2-Year Chart

HLF recently rebounded from a key trend line to move back within striking distance of the all-time high at $53, take a look below.

Read the April 5 HLF article here

 

Last Week's Momentum Zacks Rank Buy Stocks

Hanesbrands, Inc. (HBI: 27.64 0.00 0.00%) has been hot for the last 12 months, recently hitting a new multi-year high above $31 after reporting a 61% earnings surprise in late April. With a bullish next-year estimate calling for 21% earnings growth, the long-term picture looks good too. Read Full Article.

Ann Taylor Stores Corp. (ANN: 19.28 0.00 0.00%) reported awesome Q1 same-store sales growth of 14% in its late May, a dramatic improvement from a 30% decline last year. With estimates on the rise and the multi-year high in sight, shares look well positioned for more gains. Read Full Article.

Watts Water Technologies, Inc. (WTS: 31.03 0.00 0.00%) recently began rebounding from a key trend line after hitting a new multi-year high at $37 in mid May. This Zacks #1 rank stock has an average earnings surprise of 26% over the last year and trades at a discount to its peer's with a forward P/E of 16.5X. Read Full Article.

Dress Barn, Inc. (DBRN: 25.41 0.00 0.00%) recently rebounded from a key trend line after reporting better than expected Q3 results in late May that included the company's fourth earnings surprise in the last four quarters. The longer term view looks good too, with the next-year estimate projecting 21% earnings growth. Read Full Article.