Why Herbalife Is Poised to Underperform

Brian Pacampara, Pacampara, The Motley Fool
Updated

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, nutritional-supplement network marketing company Herbalife has received an alarming one-star ranking.

With that in mind, let's take a closer look at Herbalife and see what CAPS investors are saying about the stock right now.

Herbalife facts

Headquarters (founded)

Los Angeles, Calif. (1980)

Market Cap

$4.0 billion

Industry

Personal products

Trailing-12-Month Revenue

$4.1 billion

Management

Chairman/CEO Michael Johnson

CFO John DeSimone

Return on Capital (average, past 3 years)

45.2%

Cash/Debt

$333.5 million/$489.6 million

Dividend Yield

2.9%

Competitors

Amway

GNC Holdings

Wal-Mart Stores


Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 32% of the 654 members who have rated Herbalife believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, All-Star Brettmj, succinctly summed up the Herbalife bear case for our community: "Overpriced products, even if it isn't classified as a pyramid scheme this one will die off. [Underperform call] might go into the red for awhile but eventually people will come around to much better cheaper alternatives that don't have questionable sales tactics."

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The article Why Herbalife Is Poised to Underperform originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has the following options: long Jan. 2014 $50 calls on Herbalife. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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