Has Herbalife’s Volatile 2025 Rally Created a Valuation Opportunity?

• If you have been wondering whether Herbalife at around $13.99 is a bargain or a value trap, you are not alone. This breakdown is designed to help you cut through the noise.
• The stock has been on a wild ride, dropping about 5.1% over the last week but still up 51.7% over the past month and 109.4% year to date, with a 115.9% gain over the last year despite a 71.1% slide over five years.
• Recent coverage has highlighted how investors are reassessing Herbalife's long term prospects in light of shifting consumer trends and renewed interest in direct selling models. At the same time, ongoing debates around regulatory scrutiny and business model sustainability continue to influence market sentiment and help explain the sharp swings in the share price.
• On our fundamentals driven framework, Herbalife currently scores a 5 out of 6 on valuation. This suggests the market may still be underestimating the stock. Next, we walk through the main valuation approaches before finishing with a more holistic way to think about what Herbalife is really worth.

Herbalife delivered 115.9% returns over the last year. See how this stacks up to the rest of the Personal Products industry.

Approach 1: Herbalife Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth by projecting the cash it can generate in the future and then discounting those cash flows back to today in dollar terms.

For Herbalife, the model starts with last twelve months Free Cash Flow of about $184.9 Million and uses a 2 Stage Free Cash Flow to Equity approach. In the near term, cash flows are projected to dip slightly to around $162 Million in 2024, then gradually recover, with Simply Wall St extrapolating analyst expectations so that annual Free Cash Flow reaches roughly $225.1 Million by 2035.

When all of those projected cash flows are discounted back, the resulting intrinsic value is about $22.63 per share. Compared with the current share price of roughly $13.99, the DCF implies Herbalife is trading at a 38.2% discount, suggesting the market is pricing in far more pessimism than the cash flow outlook supports.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Herbalife is undervalued by 38.2%. Track this in your watchlist or portfolio, or discover 914 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Herbalife.

Approach 2: Herbalife Price vs Earnings

For profitable businesses like Herbalife, the price to earnings, or PE, ratio is a useful shorthand for how much investors are willing to pay for each dollar of current earnings. In general, faster growing and lower risk companies deserve higher PE ratios, while slower growth or more uncertainty usually means a lower, discounted multiple.

Herbalife currently trades on a PE of about 4.5x, which is far below both the Personal Products industry average of roughly 22.7x and a peer group average of around 18.7x. To go a step further than simple comparisons, Simply Wall St calculates a proprietary Fair Ratio, the PE you might expect once you factor in Herbalife s specific earnings growth outlook, profitability, industry position, size, and risk profile. For Herbalife, that Fair Ratio comes out at about 11.9x.

Because the Fair Ratio incorporates company level fundamentals rather than just copying what peers trade on, it offers a more tailored view of what a reasonable multiple should be. With the current PE of 4.5x sitting well below the 11.9x Fair Ratio, this framework points to Herbalife being undervalued on an earnings basis.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1466 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Herbalife Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way for you to connect your view of Herbalife s story with a concrete financial forecast and an explicit fair value estimate. A Narrative on Simply Wall St is where you spell out your assumptions for future revenue, earnings and margins, then tie them to a fair value that you can easily compare with today s share price to decide whether you think the stock is a buy, hold or sell. Narratives live inside the Community page on the platform used by millions of investors, and they are dynamic, updating automatically as new earnings, news or guidance come in so your story always stays in sync with the latest information. For Herbalife, one investor might create a cautious Narrative that focuses on regulatory risk and maturing markets to arrive at a fair value near 7, while another might emphasize a successful wellness transformation and improving execution to support a fair value closer to 11. It is the contrast between these live Narratives that helps you quickly see which story you find more convincing.

Do you think there's more to the story for Herbalife? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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