Herbalife Ltd. (HLF), a seller of nutritional supplements and weight-management products, experienced double-digit sales growth in many of its top countries during the fourth quarter. The news fueled a strong quarterly report, an enhanced guidance, rising earnings estimates and, ultimately, its spot today as an Aggressive Growth pick.
Full Analysis:
Last week, Herbalife announced adjusted fourth-quarter earnings of 79 cents per share, compared to the consensus estimate of 73 cents. This marked a positive surprise of 8.2%, and continued an impressive streak of better-than-expected profit results. The company topped analyst expectations in each quarter of 2007 with an average surprise of almost 5%.
Sales improved 18.6% year over year to $578.1 million, versus $487.4 million. The big news was a string of double-digit sales increases for some of HLF’s top countries, including growth of 22.1% in the U.S., 18.9% in Taiwan, 21.9% in Italy and 145.8% in China.
A favorable impact from currency fluctuation also aided the quarter’s sales growth.
This marked the company’s 16th straight quarter of double-digit growth and record net sales – and HLF doesn’t seem to be slowing down. Equally as important as its quarterly results, the company – prompted by solid business trends - raised its 2008 EPS guidance to between $3.25 and $3.30. It had previously predicted $3.17 to $3.23.
For the first quarter, HLF provided a guidance of 77 cents to 79 cents.
Analysts responded by raising their expectations for 2008 and, consequently, securing HLF’s position as a Zacks #1 Rank (“strong buy”) stock. The consensus estimate for the year is now $3.31, up 3.1% over the month-ago mark of $3.21. Six of seven covering analysts contributed to the enhancement, showing a high degree of agreement on HLF’s prospects.
Estimates have improved by a penny in the past seven sessions as well.
For the first quarter, expectations improved 8.2% in the past month to 79 cents from 73 cents.
The growing health culture, especially the more recent awareness of the extent and dangers of obesity, put HLF in a sweet spot – if it can take advantage. Its strong quarterly report strongly suggests that it can. Furthermore, its track record of better-than-expected profit results – combined with the raised guidance – shows it has been capitalizing for a while and is very likely to continue.
Strong worldwide demand and the business model to satisfy are two of the major reasons why HLF is the Aggressive Growth Stock of the Day.
Profile:
Herbalife is a global network marketing company that sells weight-management, nutrition and personal care products intended to support a healthy lifestyle. The company’s products are sold in 65 countries through a network of 1.7 million independent distributors. It supports the Herbalife Family Foundation and its Casa Herbalife program to bring good nutrition to children.
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Friday, March 07, 2008
HLF - Herbalife Ltd - company’s products are sold in 65 countries through a network of 1.7 million independent distributors
MA - MasterCard - ROE of 27% more than doubles the industry’s average of 12%
MasterCard, Inc. (MA), which recently declared a quarterly cash dividend of 15 cents per share, is yielding 0.3%. This yield is ahead of the industry average as MA operates in an industry that virtually offers no dividends. The Zacks #1 Rank (Strong Buy) company’s fourth-quarter and full-year results showed solid year-over-year improvement in both earnings and revenues for the quarter and the full year. The company‘s return on equity (ROE) of 27% more than doubles the industry’s average of 12%. MasterCard’s net profit margin of 26.7% crushes the industry’s average of 4%.
Full Analysis
As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes more than 18 billion transactions each year, and provides analysis as well as consulting services to financial institution customers and merchants. Through its family of brands, including MasterCard(R), Maestro(R) and Cirrus(R), MasterCard serves consumers and businesses in more than 210 countries and territories.
The company recently declared a quarterly cash dividend of 15 cents per share to holders of shares of its Class A common stock and Class B common stock. The dividend is payable on May 9, 2008 to shareholders of record of its Class A common stock and Class B common stock as of April 9, 2008. The company’s dividend yield of 0.3% is ahead of the industry average as MA operates in an industry that virtually offers no dividends.
In late January, the Zacks #1 Rank (Strong Buy) company announced fourth-quarter and full-year results. The credit card giant showed solid year-over-year improvement in both earnings and revenues for both the quarter and the full year.
"Our fourth-quarter and full-year results reflect the strength of MasterCard's global business model," said Robert W. Selander, MasterCard president and chief executive officer. "We continue to benefit from the worldwide demand for electronic payments, solid performance in high-growth regions such as South Asia/Middle East/Africa and Latin America, as well as strong growth in processed transactions and cross-border travel volumes.”
For the 2008 year, three out of 18 covering analysts hiked their earnings forecasts. Estimates of $7.50 per share stand above last month’s projections of $7.42. The most accurate estimate is a more bullish $7.52 per share. Earnings per share are expected to grow by 20% for MA, which is higher than the industry’s average of 17%.
The company‘s ROE of 27% more than doubles the industry’s average of 12%. MasterCard’s net profit margin of 26.7% crushes the industry’s average of 4%.
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UVV - Universal Corp - 32% gain in less than four weeks
Universal Corporation (UVV) is operating in a segment that has been particularly resistant to fluctuations in domestic and global economics over the past 60 years. This tobacco processor and distribute reported excellent third quarter results on Feb 7 that included a 42% jump in operating income. Projections moving forward are bullish, with the next-year estimate pegged at $5.25 per share compared to the current-year estimate of $4.55, which would represent 15% growth in earnings.
Full Analysis
Universal Corporation, together with its subsidiaries, engages in the purchasing and distribution of tobacco leaf to manufacturers for consumer products. Universal Corporation was founded in 1888 and is headquartered in Richmond, Virginia.
One of the most resilient segments of the stock market over the years has been the tobacco industry, which has traditionally held-up well in challenging economic times and delivered very respectable results under better circumstances. As the market has been in flux over the big meltdown in financial companies and credit markets, Universal Corp. has been delivering solid returns to shareholders.
On Feb 7 the company reported very strong third quarter results which included 12% growth in operating revenue, up to $573 million. Income from continuing operations increased 42% to $50.8 million, up from $35.8 million last year. This produced earnings of $1.56 per share, a very nice number by any standard.
For the nine months ended on December 31, 2007, Universal earned $109.4 million from continuing operations, or $3.38 per diluted share, compared to $59.3 million, or $1.87 per diluted share last year.
The company said that the sharp increase in income was driven by a few key factors, including a reduction of restructuring charges and adjustments in inventory valuation.
Universal reported that it's North American operating income had slumped in the last nine months, but was made-up for by stronger growth in international regions such as Europe and Asia.
The company's growth trajectory looks very favorable. The current-year estimate is currently projected at $4.55, while the next-year estimate is pegged at $5.25, which would represent 15% growth in earnings.
Since the strong third quarter results the company's share price has been on quite a run, moving from $46 to over $61 per share. more than a 32% gain in less than four weeks. Shares finally moved beyond the $55 level which they had traded beneath for about six months. This was a critical development that bodes well for shareholders. The next target is the 52-week high just above $67. The stochastic is still providing a positive indication that shares are not yet trading in overbought territory, is spite of the recent upward move.
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OMG - OM Group - Brokerage analysts continue to raise estimates on the company
OM Group is riding global economic expansion as companies around the world increase demand for specialty chemicals. The company recently reported record fourth-quarter and 2007 earnings. The company easily surprised on estimates in the fourth quarter by 18.79%. Om Group has a P/E of only 9.26.
Full Analysis
OM Group, Inc. (OMG) manufactures specialty chemicals and advanced materials that are used in complex chemical and industrial processes. OMG is the world's leading producer of cobalt-based chemicals and one of the largest suppliers of nickel-based chemicals.
The company also produces chemicals from barium, calcium, iron, manganese, potassium, rare earths, zinc, zirconium, germanium and copper. The end-use applications for its products include affordable energy, portable power, clean air, clean water and proprietary products and services for the microelectronics industry.
OMG, a Zacks #1 Rank (Strong Buy), is a global company, with manufacturing facilities in the Americas, Europe, Asia and Africa.
The company has been operating on all cylinders. On Feb 28, the company announced record fourth-quarter and full-year earnings for 2007.
OMG reported net income of $48.0 million, or $1.58 per share, in the fourth quarter of 2007, compared with net income of $56.8 million, or $1.93 per share, in 2006. The year-over-year decrease was a result of income from a discontinued nickel business in the 2006 period.
The company beat analysts' consensus estimates by 25 cents. Analysts' estimates called for $1.33 per share.
Net sales also soared for the fourth quarter, coming in at $309.4 million compared with $172.1 million in the year-ago period. OM Group attributed the gain to increased product selling prices, strong demand from customers and the re-sale of cobalt metal. Cobalt metal prices soared in 2007 to an average of $32.68 compared with $18.66 in 2006. Favorable currency exchange gains also helped during the quarter.
"As was the case consistently throughout the year, we enjoyed strong customer demand for our products in nearly every end market we serve, most notably battery, chemical, powder metallurgy, and tire," said Joseph M. Scaminace, chairman and chief executive officer.
"Similarly, we benefited from favorable pricing for our products, which resulted in higher gross profit. And, thanks to our ongoing operational excellence initiatives, we were able to leverage operating expenses to achieve operating profit nearly five times greater than the same period last year," he said.
The company is bullish about 2008. In 2007, OMG acquired two electronic businesses, Rockwood Holdings and Borchers, which should give the company a bigger platform in the lucrative technology market.
"We enter 2008 with tremendous momentum, a portfolio more appropriately balanced, true financial flexibility and exciting, long-term growth opportunities before us," Scaminace said.
The company said it still expects revenues of $2 billion to $4 billion by 2010.
Brokerage analysts continue to raise estimates on the company. In the last week, one out of two covering analysts raised for the first quarter on average of 16 cents to $2.30 from $1.87 per share. For the full year, one out of two analysts raised in the last week by 37 cents to $6.77 from $6.40.
The company has attractive fundamentals. OM Group has a P/E of 9.26 and a P/B of 1.85. Analysts expect 2008 year-over-year growth of 19.13%. OMG has also been blowing away estimates for the last four quarters, on average of 25.56%.
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