Examining Herbalife Nutrition Stock Prospects in 2019

Financial Summary

Herbalife Nutrition Ltd. (HLF) is a nutrition company that has five revenue streams: Weight Management; Energy, Sports, and Fitness; Targeted Nutrition; Outer Nutrition; Promotional; and Literature. HLF is a promising investment option that attracts investors left and right. The stock has registered a surge of 68.7% which is nothing to frown at by any standard. At the close of 2018, the volume points grew by 15% to reach 1.506.9 million which was way above management projections. Sustained high performance is attributed to Herbalife’s impressive portfolio of weight management products coupled with a strong global footprint. If the consistent growth of the stock is anything to go by, this bull-run will be witnessed in 2019 as well.

Nevertheless, the stock registered a downtrend of -1.24% and as of January 29th, the closing share price was $58.22. While it is tempting for investors to cash in to reduce further loses, sell-side analysts reckon that Herbalife’s stock will see a significant gain of nearly 11.65% shortly. Following this revelation, investors who have been in this industry long enough can attest that dumping this stock due to a start-of-the-year decline would be a short-sighted mishap. EPS growth is an essential factor that explains to investors how Herbalife is allocating resources to ensure sustainable growth in the upcoming months.

Direct Sales Model

The resounding success of Herbalife is thanks to its direct selling model that harnesses the power of positive word-of-mouth messaging (WOM) as it is the most influential messaging. The company relies on satisfied customers and their friendship networks to share valuable insights into the company’s products. The direct sales model involves contractors, distributors who work autonomously, sales representatives or consultants who interact with customers directly.

There are many benefits of the direct sales model, and we examine two reasons why Herbalife has employed this selling approach:

Brand name visibility

Herbalife has enjoyed a great run that spans four decades, and this has turned the company and its products into a household name locally and abroad. What’s more, Direct Selling News has consistently ranked Herbalife among the highly acclaimed list of top ten direct selling companies globally.

Personalized relationships

Sales representatives usually start with prospective customers in their social spheres then snowball from there. These personal relationships give them a unique advantage that makes converting sales so much easier and getting return customers is an everyday occurrence.

High brand visibility and a wide-reaching network of sales consultants across 90 countries, Herbalife is set to haul in more revenues in 2019. Going by previous performance, the company will maintain its burgeoning pool of customers as the sales consultants strive hard to recruit new ones. Efforts are afoot to expand the product portfolio so distributors can fulfil the evolving needs of customers as seen with the High Protein Iced Coffee.