Herbalife Ltd. (NYSE:HLF) is expected to deliver a double-digit sales growth and earnings per share that is slightly higher than its guidance for the third quarter this year. The nutrition and weight management multilevel marketing company is scheduled to deliver its quarterly financial results on October 28.
Barclays Equity Research analyst Meredith Adler projects that the sales of Herbalife Ltd. (NYSE:HLF) will have grown 16.9 percent for the third quarter. The analyst assumed that the sales growth of the company was driven by a 12.9 percent increase in volume points, partially offset by a 1.5 percent headwind from the foreign currency exchange.
Herbalife is expected to generate $1.15 earnings per share
Herbalife Ltd. (NYSE:HLF) is expected to generate $1.15 earnings per share for the third quarter. Adler’s estimate is $0.01 higher than the consensus, and slightly higher than the high-end guidance of $1.09 to $1.13 per share.
Adler is hoping to hear updates from the management of Herbalife Ltd. (NYSE:HLF) regarding important issues during its earnings call, such as additional steps or plans to improve its transparency, the outlook for completing the re-audit of financial statements, and aggressiveness to repurchase stock.
The analyst is also interested to hear if there is any updated survey work, such as the impact of foreign exchange rates on its earnings and any variation in trends due to negative publicity and changes in its business model.
Herbalife is increasing its transparency
Adler remained bullish on the shares of Herbalife Ltd. (NYSE:HLF) because of the fact that the company continues to deliver robust revenue and earnings growth with compelling valuation. She also emphasized that the company is increasing the level of its transparency and focusing on shareholder value.
“The fundamentals of the business remain robust and we see investor confidence being slowly restored through increasing transparency in the business model and the change or elimination of policies that could be perceived negatively,” wrote Adler in a note to investors.
The analyst said the shares of Herbalife Ltd. (NYSE:HLF) will be propelled by near-term catalysts, such as the announcement of re-audited financial results and a potential significant stock buyback.
On the other hand, Adler emphasized that the biggest risk that could affect Herbalife Ltd. (NYSE:HLF) is when the government begins to launch an investigation on the company’s business practices. Activist investor Bill Ackman of Pershing Square Capital is firm in his conviction that Herbalife is a pyramid scheme, and continues to encourage regulators in the United States to investigate the company.
Aside from Ackman, different Latino civil rights organizations are questioning the business practices of Herbalife Ltd. (NYSE:HLF). They are encouraging the FTC to investigate the company. Last week, they urged the attorney general of California, Kamala Harris, to look into the alleged predatory business practices of the company.