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Medifast (MED) Lined Up for Q4 Earnings: Key Things to Note

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Medifast, Inc. (MED - Free Report) is likely to witness growth in the top and bottom lines when it reports fourth-quarter 2020 numbers on Feb 25. The Zacks Consensus Estimate for earnings has remained stable over the past 30 days at $2.36 per share, which however indicates significant growth from $1.19 reported in the prior-year period. This manufacturer and distributor of weight loss, weight management and healthy living products delivered an earnings surprise of 16.9% in the last reported quarter and has a trailing four-quarter earnings surprise of 20.2%, on average.

The Zacks Consensus Estimate for revenues is pegged at $247 million, suggesting an increase of 44.6% from the prior-year quarter’s reported figure. Further, the rate of top-line growth is likely to be higher than the previous quarter, wherein Medifast’s net revenues advanced 42.8%.

MEDIFAST INC Price, Consensus and EPS Surprise

MEDIFAST INC Price, Consensus and EPS Surprise

MEDIFAST INC price-consensus-eps-surprise-chart | MEDIFAST INC Quote

Key Factors to Note

Medifast has been benefiting from strength in its OPTAVIA lifestyle solution and coaching support system, given consumers’ rising interest in health and wellness. In the last reported quarter, a rise in total active earning OPTAVIA coaches as well as average revenue per active earning OPTAVIA coach boosted the company’s results. To this end, Medifast’s focus on developing tools and programs to increase the efficiency of coaches has been working well.

The company has been committed to making further investments to improve its infrastructure in order to aid growth. It has been speeding up its supply-chain efforts, alongside making moves to expand capacity in powder and bar manufacturing as well as distribution. Apart from this, Medifast is focused on making technological investments, as part of which its OPTAVIA Coach Connect app and the OPTAVIA Client app are noteworthy. Certainly, Medifast is likely to have encashed on the opportunities stemming from consumers’ rising inclination toward health and wellness in the United States as well as other parts of the world.

That being said, the abovementioned investments related to the supply chain, coach incentive programming and technology are likely to have affected Medifast’s operating margin in the quarter under review. Also, the company has been seeing high SG&A expenses, mainly due to escalated OPTAVIA commission costs.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Medifast this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Medifast currently has a Zacks Rank #2 and an Earnings ESP of 0.00%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

The J.M. Smucker (SJM - Free Report) has an Earnings ESP of +1.60% and a Zacks Rank #3.

Nomad Foods (NOMD - Free Report) has an Earnings ESP of +2.22% and a Zacks Rank #3.

Purple Innovation (PRPL - Free Report) has an Earnings ESP of +4.76% and a Zacks Rank #3.

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