Herbalife Ltd Shares Rise by 3% after Record Results
The shares of Herbalife Ltd (NYSE: HLF) went up by over 3% as investors pushed the prices of the stocks while awaiting the announcement of the fourth-quarter earnings of the company. This was a sure sign of Herbalife Ltd beating estimates with its fourth quarter earnings. Herbalife Ltd did not disappoint shareholders who further pushed the prices by 2%. According to the release Herbalife Ltd reported a net income of over $110 million in comparison to the previous year’s $105 million. The sales of the company increased by more than 20% to over $1 million along with a volume growth of more than 15%.
Analysts had estimated just over one dollar per share earnings for the company while Herbalife's the past the expectations of the analysts. Michael O Johnson the chairman and CEO of Herbalife stated that the company has continued to deliver record results in profitability and sales with the commitment of independent distributors who have been penetrating deeper into existing and new markets to increase the client list of the nutrition products on a daily basis. Johnson reiterated that the distributors of the company were an important part of combating global problems such as poor nutrition and obesity which was the prime reason for the record results of the company.
Herbalife increased its financial year 2013 earnings per share guidance to over $4.5 from $4.45 in the previous year. In the year that ended on 31 December 2012 Herbalife saw net sales of more than $4 billion which surpassed expectations not just the analysts but also of the company. Herbalife reported an 18% volume increase since 2011 when the company reported a net income of just over $470. In the year ended 31 December 2012 the company also saw cash flow from its operations at over $560 million which is 11% increase since 2011.
In the beginning of 2012 the company established a repurchase program in which it repurchased common shares of over $520 million that were outstanding. The record earnings of the company comes after Billy Ackman of Pershing Square Capital Management stated that he will be shorting over 15 million shares of Herbalife Ltd at a price target of zero dollars. Ackman states that he will be doing this because of his thesis which found that Herbalife operates using a pyramid scheme and regulators need to review the company.
Herbalife Ltd on the other hand has denied all the accusation by Bill Ackman saying that he is utilized inaccurate information which is also outdated for his thesis. The company has refused to answer a list of over 250 questions Bill Ackman put together for the management of Herbalife to answer. Daniel Loeb the founder of Third Point LLC revealed in January 2013 that he had a stake of over 8% in Herbalife along with Carl Ichan the billionaire investor.
Despite the accusations by Bill Ackman the shares of Herbalife Ltd are trading at over $40 per share which is up by almost 1% since the 2012.