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Herbalife Nutrition Ltd. (NYSE:HLF), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$58.20 and falling to the lows of US$44.03. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Herbalife Nutrition's current trading price of US$45.77 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Herbalife Nutrition’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's the opportunity in Herbalife Nutrition?
Great news for investors – Herbalife Nutrition is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $63.66, but it is currently trading at US$45.77 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that Herbalife Nutrition’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What does the future of Herbalife Nutrition look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Herbalife Nutrition's earnings over the next few years are expected to increase by 34%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Since HLF is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on HLF for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy HLF. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 3 warning signs for Herbalife Nutrition you should be mindful of and 1 of them is potentially serious.
If you are no longer interested in Herbalife Nutrition, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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