Herbalife Earnings: Crowd & Experts Expect More Than 30% Decline

Shares of Herbalife Ltd. HLF were down about 3 percent on Tuesday, as the company prepares to report its first quarter financial results. The call is scheduled for after the market close.

According to Estimize, the Street and the crowd expect to see a decline of at least 30 percent in earnings year-over-year. In the first quarter of 2014, the company reported earnings of $1.50 per share on revenue of $1.3 billion, comfortably surpassing guidance and estimates.

For the first quarter of 2015, the company guided earnings of $1.05 per share on revenue of $1.086 billion. However, the crowd projects lower EPS, at $1.04, on revenue of $1.059 billion. The Street is even more bearish, modeling consensus EPS of $1.00 on revenue of $1.055 billion.

The chart above shows how Herbalife’s actual earnings have compared to guidance and estimates over the past couple of years. The company tends to beat estimates and guidance, although some quarters see exceptions.

The second graph illustrates the way in which consensus has changed over time. Since the beginning of the year, the Street has become increasingly bearish, same as the crowd. Guidance has been maintained.

Mixed Feelings

In a recent report, analysts at Pivotal Research Group noted that Herbalife is an "excellent investment," contrary to what Pershing Square's European Slide Deck said.

Related Link: Analyst Says Chance Of Adverse Herbalife FTC Finding 'Very Unlikely'

In another note, analysts at Canaccord Genuity said “Q1 results, particularly how the quarter closed, should provide better clarity to the impacts of a suite of changes to the company's marketing plan. Volume declines in several key markets are fully expected, but the magnitude of such changes as the full implementation of first order limitations (previously limited to about 18 markets) and debut of a new policy mandating qualifying purchases direct from Herbalife will be the key insights. Only the change from the traditional 5K/12-month qualification for sales leaders to 4K should have impacted Q4 when it was introduced in November.”