Yahoo Finance Earnings Beat: Herbalife Nutrition Ltd. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
A week ago, Herbalife Nutrition Ltd. (NYSE:HLF) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Herbalife Nutrition beat earnings, with revenues hitting US$1.5b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 20%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
View our latest analysis for Herbalife Nutrition
Following the latest results, Herbalife Nutrition's twin analysts are now forecasting revenues of US$5.81b in 2021. This would be a decent 8.6% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 44% to US$3.77. Before this earnings report, the analysts had been forecasting revenues of US$5.66b and earnings per share (EPS) of US$3.50 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$59.67, suggesting that the forecast performance does not have a long term impact on the company's valuation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Herbalife Nutrition's rate of growth is expected to accelerate meaningfully, with the forecast 8.6% revenue growth noticeably faster than its historical growth of 3.1%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.7% next year. Herbalife Nutrition is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Herbalife Nutrition's earnings potential next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Herbalife Nutrition. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Herbalife Nutrition going out as far as 2022, and you can see them free on our platform here.
It is also worth noting that we have found 3 warning signs for Herbalife Nutrition (1 can't be ignored!) that you need to take into consideration.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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