Herbalife Ltd. (HLF) tops second-quarter earnings and revenue estimates

Herbalife LTD. (HLF) exited with quarterly earnings of $0.96 per share, beating Zacks consensus estimate of $0.63 per share. That compares to earnings of $1.52 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 52.38%. A quarter ago, this company was expected to post earnings of $0.87 per share when it actually produced earnings of $0.99, delivering a surprise of 13.79%.

In the past four quarters, the company has exceeded consensus EPS estimates three times.

Herbalife Ltd., which is part of the Zacks Retail – Drugstores and Drugstores industry, reported revenue of $1.39 billion for the quarter ended June 2022, beating Zacks’ consensus estimate of 7.54%. That compares to revenues of $1.55 billion a year ago. The company has exceeded consensus revenue estimates only once in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.

Herbalife Ltd. Stocks are down about 40% year-to-date against a -13.6% decline for the S&P 500.

What’s next for Herbalife LTD.

While Herbalife LTD. Has underperformed the market so far this year, the question on investors’ minds is: what’s next for the stock?

There is no easy answer to this key question, but a reliable measure that can help investors answer it is the company’s earnings outlook. This includes not only current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Prior to this earnings release, the trend in estimate revisions for Herbalife LTD. Unfavorable. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation translates into a Zacks No. 4 (sell) ranking for the stock. Thus, stocks are expected to underperform the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.81 on $1.3 billion in revenue for the upcoming quarter and $3.29 on $5.25 billion in revenue for the current fiscal year.

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, retail – pharmacies and pharmacies currently sits in the bottom 16% of Zacks 250+ industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

CVS Health (CVS), another stock in the same sector, has yet to report results for the quarter ending June 2022. Results are expected to be released on August 3.

This pharmacy chain and pharmaceutical benefits manager is expected to post quarterly earnings of $2.16 per share in its next report, representing a year-over-year change of -10.7%. The consensus EPS estimate for the quarter has been revised down 2.1% in the past 30 days from the current level.

CVS Health revenue is expected to be $76.57 billion, up 5.5% from the prior year quarter.

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