Herbalife Generates 20.25% ROIC Against 7.84% WACC, ROIC/WACC Ratio 2.58
HLF•Herbalife Nutrition generated a 20.25% ROIC versus a 7.84% WACC, yielding a ROIC/WACC ratio of 2.58 and creating $2.58 of value per dollar invested. Among health and wellness peers it ranks behind Deckers’ 3.43 but ahead of Yelp’s 2.39, Nu Skin’s 1.11 and USANA’s 0.24.
1. Capital Efficiency Metrics
Capital efficiency is measured by comparing Return on Invested Capital (ROIC) to Weighted Average Cost of Capital (WACC). A ROIC above WACC signifies value creation, with the ROIC/WACC ratio indicating dollars of value generated per dollar invested.
2. Herbalife’s Performance
Herbalife recorded a ROIC of 20.25% and a WACC of 7.84%, resulting in a ROIC/WACC ratio of 2.58. This means the company produces $2.58 of shareholder value for every dollar of capital deployed.
3. Peer Comparison
Within the health and wellness sector, Deckers leads with a 3.43 ROIC/WACC ratio, followed by Herbalife at 2.58 and Yelp at 2.39. Nu Skin trails at 1.11, while USANA and LL Flooring post ratios of 0.24 and -5.43 respectively.
4. Investor Considerations
Herbalife’s robust capital efficiency underscores its ability to deploy resources profitably relative to peers, which may support valuation. Investors should watch whether the company sustains this performance while facing market competition and cost pressures.
