Financial Analysis: Herbal Center (HLF) vs. Cardinal Health (CAH)

Herbal Center (NYSE: HLF) and Cardinal Health (NYSE:CAH) are both retail/wholesale companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, profitability, earnings, dividends, valuation, risk and analyst recommendations.

Profitability

This table compares Herbal Center and Cardinal Health’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Herbal Center 4.83% 457.78% 12.12%
Cardinal Health 1.37% 24.81% 4.34%



Volatility & Risk

Herbal Center has a beta of 1.21, suggesting that its share price is 21% more volatile than the S&P 500. Comparatively, Cardinal Health has a beta of 1.07, suggesting that its share price is 7% more volatile than the S&P 500.

Insider & Institutional Ownership

99.5% of Herbal Center shares are held by institutional investors. Comparatively, 90.0% of Cardinal Health shares are held by institutional investors. 6.2% of Herbal Center shares are held by company insiders. Comparatively, 1.0% of Cardinal Health shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

Cardinal Health pays an annual dividend of $1.85 per share and has a dividend yield of 3.1%. Herbal Center does not pay a dividend. Cardinal Health pays out 34.3% of its earnings in the form of a dividend. Cardinal Health has raised its dividend for 13 consecutive years.

Analyst Ratings

This is a summary of recent ratings and price targets for Herbal Center and Cardinal Health, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Herbal Center 0 1 4 0 2.80
Cardinal Health 2 12 3 0 2.06

Herbal Center presently has a consensus target price of $103.75, suggesting a potential upside of 3.14%. Cardinal Health has a consensus target price of $74.62, suggesting a potential upside of 23.39%. Given Cardinal Health’s higher possible upside, analysts clearly believe Cardinal Health is more favorable than Herbal Center.

Valuation & Earnings

This table compares Herbal Center and Cardinal Health’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Herbal Center $4.43 billion 1.99 $213.90 million $4.86 20.70
Cardinal Health $129.98 billion 0.15 $1.29 billion $5.40 11.20

Cardinal Health has higher revenue and earnings than Herbal Center. Cardinal Health is trading at a lower price-to-earnings ratio than Herbal Center, indicating that it is currently the more affordable of the two stocks.

Summary

Herbal Center beats Cardinal Health on 11 of the 17 factors compared between the two stocks.

Herbal Center Company Profile

Herbalife Ltd. develops and sells nutrition solutions in North America, Mexico, South and Central America, Europe, the Middle East, Africa, and the Asia Pacific. It provides science-based products in the areas of weight management; targeted nutrition; energy, sports, and fitness; and outer nutrition. The company offers weight management products, including meal replacement products, protein shakes, drink mixes, weight loss enhancers, and healthy snacks; targeted nutrition products comprising dietary and nutritional supplements that contain herbs, vitamins, minerals, and other natural ingredients; outer nutrition products consisting of facial skin, body, and hair care products; and energy, sports, and fitness products, such as N-R-G tea and energy drink products. It also provides literature, promotional, and other materials, including start-up kits, sales tools, and educational materials. The company offers its products through own retail stores, as well as through independent service providers, sales representatives, and sales officers. Herbalife Ltd. was founded in 1980 and is headquartered in Los Angeles, California.

Cardinal Health Company Profile

Cardinal Health, Inc. is a healthcare services and products company. The Company operates through two segments: Pharmaceutical and Medical. The Pharmaceutical segment distributes branded and generic pharmaceutical, specialty pharmaceutical, over-the-counter healthcare and consumer products. This segment also operates nuclear pharmacies and cyclotron facilities; provides pharmacy management services to hospitals, as well as medication therapy management and patient outcomes services to hospitals, other healthcare providers and payers, and provides services to healthcare companies. The Medical segment distributes a range of medical, surgical and laboratory products, and provides services to hospitals, ambulatory surgery centers, clinical laboratories and other healthcare providers. This segment also manufactures, sources and develops its own Cardinal Health brand medical and surgical products. It provides post-acute care management and transition services, and software to hospitals.

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