Herbalife Limited (HLF) recently reported a 17% positive earnings surprise driven by strong sales growth across each market.
Earnings estimates have been soaring for this Zacks #2 Rank (Buy) stock. Valuation is attractive, too, with shares sporting a PEG ratio of 1.08.
Herbalife also pays a dividend that yields 1.3%.
Strong Sales Volume Drives Earnings Beat
Herbalife saw excellent sales growth in the fourth quarter. Net sales were up 19% year-over-year driven by a 16.1% increase in sales volume.
Growth was particularly strong in the emerging markets, which saw a 19.3% uptick in volume. The established markets weren’t too shabby either, showing a 12.5% increase.
Gross profit fell slightly from 80.3% of sales to 79.9% in the quarter, while operating income increased 12.7%.
Earnings per share came in at $1.31, crushing the Zacks Consensus Estimate of $1.12. It was a 34% increase over the same quarter in 2009.
Solid Growth Ahead
Management provided guidance for 2011 following the strong Q4 results. The company expects to earn between $5.15 and $5.40 per share in 2011 on net sales growth of 13% to 15%.
The Zacks Consensus Estimate is $5.40, which is at the upper end of management’s guidance. This represents a solid 13% increase over 2010 EPS.
The 2012 consensus estimate is currently $6.17, equating to 14% EPS growth.
Estimates have been climbing steadily for Herbalife over the last several month as the company continues to deliver strong results:
It is a Zacks #2 Rank (Buy) stock.
Attractive Valuation
Although shares are up about 80% in the last year, valuation remains attractive for HLF thanks to rising earnings estimates.
Shares trade at 14.5x forward earnings, a discount to the industry average of 16.2x. It sports a PEG ratio of 1.08.
And a Dividend Too
The company also pays a dividend that yields 1.3%. It held its quarterly dividend steady at 20 cents per share for 3 years before raising it to 25 cents last summer.
Company Description
Herbalife Limited is a network marketing company that sells weight management, nutritional supplement, energy, sports and fitness, and personal care products around the globe.
The company was founded in 1980 and has a market cap of $4.5 billion.
Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.
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