Los Angeles nutritional products company
The company reported earnings of $118.8 million, or $1.10 a share, up from $108.2 million, or 88 cents, in the same period last year. The company had forecast earnings of $1.03 to $1.07 a share.
Herbalife said revenue was $1.1 billion, a 17% increase from the same period last year.
The company has beat analysts' earnings estimates for 17 consecutive quarters.
The good numbers come after a rocky year for
Not everyone on Wall Street was swayed by the skepticism about the 33-year-old company. Billionaire investor
Analysts also remain bullish on the company. Seven recommend buying the company's stock, while three suggest holding it. They have an average 12-month estimated price of $55.57 a share, more than 40% higher than its Monday close.
Brian Wang, a Barclays analyst, said in a research note that the company has benefited by allowing its distributors to sell products in small quantities through nutrition clubs, instead of its past model of selling exclusively in bulk.
"This shift has driven significant growth, and we expect this momentum to continue," Wang said.
The controversy centers on the way Herbalife compensates the independent distributors who sell its line of meal-replacement shake mixes, nutrition bars, juices, teas and vitamins. These distributors get commissions from their own sales, as well as the sales of those they recruit into the business.
Ackman noted that about 90% of the company's distributors lose money or break even, while a scant few make huge profits. The company said that most people who sign up as distributors do it to obtain a discount and personally consume the products.
Ackman said he was not moved by Herbalife's strong sales numbers.
"Earnings are irrelevant for a pyramid scheme," he said in an email.
The company does not sell its products in retail outlets. Instead, it relies on the distributors, who recruit customers, counsel them about nutrition and fitness and sell products to them. Many distributors advertise with the slogan "Lose weight now. Ask me how."
Founded in 1980, the company sells its products in more than 80 countries.
Herbalife shares closed at $38.75 on Monday, up 48 cents, or 1.2%.