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Herbalife Nutrition Ltd. (NYSE:HLF) Capital Efficiency Analysis
Mar 25, 2025 8:00 PM - Danny Green(Last modified: Mar 26, 2025 2:22 PM)
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- Herbalife Nutrition Ltd. (NYSE:HLF) showcases a ROIC of 33.60% and a WACC of 19.34%, indicating efficient capital utilization.
- Nu Skin Enterprises and Yelp Inc. demonstrate lower capital efficiency compared to Herbalife, with Nu Skin showing particularly weak performance.
- Deckers Outdoor Corporation outperforms Herbalife with the highest ROIC to WACC ratio among the peers, indicating exceptional capital management.
Herbalife Nutrition Ltd. (NYSE:HLF) is a global nutrition company that develops and sells dietary supplements, weight management, sports nutrition, and personal-care products. The company operates through a network of independent distributors and is known for its direct-selling model. Herbalife competes with other companies in the health and wellness industry, such as Nu Skin Enterprises and USANA Health Sciences.
Herbalife's Return on Invested Capital (ROIC) is 33.60%, while its Weighted Average Cost of Capital (WACC) is 19.34%. This results in a ROIC to WACC ratio of 1.74, indicating that Herbalife is generating returns well above its cost of capital. This suggests efficient capital utilization and a strong ability to create value for shareholders.
In comparison, Nu Skin Enterprises has a ROIC of 0.34% and a WACC of 6.26%, resulting in a ROIC to WACC ratio of 0.05. This indicates that Nu Skin is not generating sufficient returns relative to its cost of capital, which may raise concerns about its capital efficiency.
Yelp Inc., although not a direct competitor in the nutrition sector, has a ROIC of 13.01% and a WACC of 10.60%, leading to a ROIC to WACC ratio of 1.23. This shows that Yelp is generating returns above its cost of capital, but not as efficiently as Herbalife.
Deckers Outdoor Corporation, with a ROIC of 30.38% and a WACC of 9.19%, boasts the highest ROIC to WACC ratio of 3.30 among the peers. This indicates exceptional capital management, as Deckers is generating returns significantly higher than its cost of capital, surpassing even Herbalife's performance in this metric.
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