When you buy a stock and hold it for the long term, you definitely want it to provide positive returns. But beyond that, you probably want it to rise above the market average. Unfortunately for shareholders while the Herbalife Nutrition Ltd. (NYSE: HLF) Its stock is up 53% over the past five years, less than the market return. If you zoom in, the stock is only up 1.2% over the past year.
Check out our latest analysis for Herbalife Nutrition
While markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just underlying business performance. A flawed but sane way of assessing how sentiment has changed around a company is to compare earnings per share (EPS) to its share price.
For five years of its share price, Herbalife Nutrition achieved total earnings per share (EPS) growth of 12% per year. The EPS growth is more impressive than the 9% annual stock price gain over the same period. So it seems that the market is not that keen on the stock these days.
In the image below you can see how the EPS has changed over time (click on the graph to see the exact values).
NYSE: HLF Earnings Per Share Growth July 30, 2021
It’s great to see Herbalife Nutrition grow its profits over the years, of course, but the future is more important to shareholders. This is taking a closer look at Herbalife Nutrition’s financial health free report on its balance sheet.
Herbalife Nutrition delivered a TSR of 1.2% for the past twelve months. But that rate of return lags behind the market. If we look back five years, the returns are even better, being 9% a year for five years. Perhaps the stock price is just taking a breather while the company executes its growth strategy. It is always interesting to follow the development of the share price over the longer term. But to better understand Herbalife Nutrition, we need to consider many other factors. Like risks, for example. Every company has them and we discovered them 3 warning signs for Herbalife Nutrition (1 of which is potentially serious!) that you should know about.
But be careful: Herbalife Nutrition may not be the best stock to buy. So check this out free List of interesting companies with past earnings growth (and further growth forecast).
Please note that the market returns reported in this article reflect the market weighted average returns on stocks currently traded on US exchanges.
When you choose to trade with Herbalife Nutrition, you are using the lowest cost * platform ranked # 1 overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds in 135 markets, all from a single integrated account.
This article from Simply Wall St is of a general nature. It is not a recommendation to buy or sell stocks and does not take into account your goals or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamentals. Note that our analysis may not take into account the latest company announcements or quality material, which may be sensitive to the price. Simply Wall St has no position in the stocks mentioned.
* Interactive Brokers rated as the lowest cost broker by StockBrokers.com Annual Online Review 2020
Do you have any feedback on this article? Concerned about the content? Get in touch directly with us. Alternatively, send an email to the editorial team (at) simplywallst.com.