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Bull Of The Day: Tivity Health (TVTY)

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Tivity Health (TVTY - Free Report) is a Zacks Rank #1 (Strong Buy) and it has solid Zacks Style Scores with a B for Value and an A for Growth.  The Zacks site shows it under its old name, Healthways and it is the parent of Nutrisystem.

I saw this stock destroyed earnings very recently and new customer growth was very impressive.  I think the lock down had a lot of people gaining weight and more recently with summers arrival they realized they need to take the weight off.

Let's take a deep look at this stock in this Bull of the Day aritcle.

Description

Tivity Health, Inc. provides health management services. The company offers services which include chiropractic services, physical therapy, occupational therapy, speech therapy, acupuncture, massage and complementary and alternative medicine services. Its network comprises SilverSneakers(R), Prime(R) Fitness and WholeHealth Living (TM). Tivity Health, Inc., formerly known as Healthways, Inc., is based in Franklin, Tennessee.

M&A And Research 

The company has said that it is looking to sell the Nurtrisystem arm after acquiring it in March of 2019.  Add to that I see some new coverage from Guggenheim and a an upgrade from Craig Hallum.  The upgrade moved the recommendation from hold to buy and Craig Hallum put a $20 price target on the stock.

Earnings History

I see an ok earnings history with two beats and two misses in the last four quarter.  The last quarter was a huge beat, with the company posting 79 cents when 25 cents was expected.  The 54 cent beat translates into a 216% positive earnings surprise.  New customer growth of 28% drove the out performance.

Estimate Movement

Estimates soared after this beat.

This quarter moved from 12 cents to 28 cents.

Next quarter moved from 15 cents to 27 cents.

The full year flipped from a loss of 73 cents to a gain of 84 cents.

Next year bumped from $0.95  to $1.39

Certainly some dramatic moves there.

Valuation

I see a forward PE of 31x and that is a lot, but the earnings growth is real.  The price to book is 22x and that is high for any company, but like HLF, the asset slim business model results in a higher book multiple.  The topline contracted, but that should change in the coming quarters.  Operating margins are bouncing around a bit, but they should kick back to double digits soon.

The wildcard here is the sale of Nutrisystem.  Is TVTY looking for a fast buck on this business or are they in it for the long haul?  To me, the move looked like a reminder to Wall Street that they owned this business and it was doing well as the pandemic wears on.

Chart

Healthways, Inc. Price, Consensus and EPS Surprise

Healthways, Inc. Price, Consensus and EPS Surprise

Healthways, Inc. price-consensus-eps-surprise-chart | Healthways, Inc. Quote

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