Herbalife LTD. (NYSE: HLF) and Avon Products (NYSE:AVP) are both retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, dividends, analyst recommendations, earnings and profitabiliy.
Profitability
This table compares Herbalife LTD. and Avon Products’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Herbalife LTD. | 9.28% | 216.82% | 14.15% |
| Avon Products | -0.99% | -3.68% | -0.23% |
Risk and Volatility
Herbalife LTD. has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500. Comparatively, Avon Products has a beta of 1.82, suggesting that its share price is 82% more volatile than the S&P 500.
Institutional & Insider Ownership
86.9% of Avon Products shares are held by institutional investors. 5.0% of Herbalife LTD. shares are held by company insiders. Comparatively, 1.3% of Avon Products shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Valuation & Earnings
This table compares Herbalife LTD. and Avon Products’ top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Herbalife LTD. | $4.42 billion | 1.40 | $727.70 million | $4.76 | 13.85 |
| Avon Products | $5.74 billion | 0.22 | $437.20 million | ($0.19) | -15.11 |
Herbalife LTD. has higher revenue, but lower earnings than Avon Products. Avon Products is trading at a lower price-to-earnings ratio than Herbalife LTD., indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of current ratings and price targets for Herbalife LTD. and Avon Products, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Herbalife LTD. | 0 | 2 | 2 | 0 | 2.50 |
| Avon Products | 0 | 5 | 1 | 0 | 2.17 |
Herbalife LTD. currently has a consensus price target of $86.33, suggesting a potential upside of 30.93%. Avon Products has a consensus price target of $4.70, suggesting a potential upside of 63.76%. Given Avon Products’ higher possible upside, analysts plainly believe Avon Products is more favorable than Herbalife LTD..
Summary
Herbalife LTD. beats Avon Products on 9 of the 13 factors compared between the two stocks.
Herbalife LTD. Company Profile
Herbalife Ltd. is a global nutrition company. The Company develops and sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products, as well as personal care products. Its operating segments are based on geographical operations in six regions: North America; Mexico; South and Central America; Europe, the Middle East, and Africa (EMEA); Asia Pacific, and China. The Company categorizes its products into five groups: weight management, targeted nutrition, energy, sports and fitness, outer nutrition, and literature, promotional and other. As of December 31, 2016, it marketed and sold approximately 140 products encompassing over 4,700 stock keeping units (SKUs) globally. Its product categories include meal replacement; protein shakes; drink mixes; dietary and nutritional supplements containing herbs, vitamins, minerals and other natural ingredients; facial skin care; body care; hair care products; sales tools, and educational materials.
Avon Products Company Profile
Avon Products, Inc. is a manufacturer and marketer of beauty and related products. The Company’s segments include Europe, Middle East & Africa; South Latin America; North Latin America, and Asia Pacific. Its product categories are Beauty, and Fashion and Home. Beauty consists of skincare (which includes personal care), fragrance and color (cosmetics). Fashion and Home consists of fashion jewelry, watches, apparel, footwear, accessories, gift and decorative products, housewares, entertainment and leisure products, children’s products and nutritional products. The Company’s products include Anew Ultimate Supreme Advanced Performance Creme, Anew Vitale Visible Perfection Blurring Treatment, Big & Multiplied Volume Mascara, Avon True Perfectly Matte Lipstick, Avon Life for Him and for Her Fragrances, Far Away Infinity Fragrance and Avon Nutra Effects body collection with Active Seed Complex. The Company primarily sells its products to the consumer through the direct-selling channel.
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