Herbalife’s ROIC of 33.60% significantly exceeds its WACC of 19.01%, indicating efficient capital utilization.
Compared to peers like Nu Skin and USANA, Herbalife showcases superior capital efficiency with a ROIC to WACC ratio of 1.77.
Deckers Outdoor Corporation (DECK) exhibits the highest capital efficiency among compared companies, with a ROIC to WACC ratio of 3.33, while LL Flooring Holdings, Inc. (LL) shows significant inefficiencies.
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 multi-level marketing strategy. Herbalife competes with companies like Nu Skin Enterprises, Inc. (NUS) and USANA Health Sciences, Inc. (USNA) in the health and wellness industry.
In evaluating Herbalife’s financial performance, the Return on Invested Capital (ROIC) of 33.60% and Weighted Average Cost of Capital (WACC) of 19.01% are crucial metrics. Herbalife’s ROIC compared to its WACC results in a ROIC to WACC ratio of 1.77. This indicates that Herbalife is generating returns well above its cost of capital, showcasing efficient capital utilization.
When comparing Herbalife to its peers, Nu Skin Enterprises, Inc. (NUS) has a ROIC of 0.34% and a WACC of 6.38%, resulting in a ROIC to WACC ratio of 0.05. This suggests that Nu Skin is not generating sufficient returns relative to its cost of capital, unlike Herbalife. Similarly, USANA Health Sciences, Inc. (USNA) has a ROIC to WACC ratio of 1.02, indicating marginally better capital efficiency than Nu Skin but still trailing behind Herbalife.
Yelp Inc. (YELP) and Deckers Outdoor Corporation (DECK) also provide interesting comparisons. Yelp’s ROIC of 13.01% against a WACC of 10.51% results in a ROIC to WACC ratio of 1.24, showing moderate capital efficiency. However, Deckers Outdoor Corporation stands out with a ROIC to WACC ratio of 3.33, the highest among the peers, indicating exceptional capital management and return generation.
LL Flooring Holdings, Inc. (LL) presents a contrasting scenario with a negative ROIC of -44.17% and a WACC of 4.13%, leading to a ROIC to WACC ratio of -10.69. This highlights significant inefficiencies in capital utilization, starkly contrasting with Herbalife’s strong performance.
