Back to top

Image: Bigstock

Here's How Medifast (MED) is Placed Ahead of Q1 Earnings

Read MoreHide Full Article

Medifast, Inc. (MED - Free Report) is likely to witness growth in the top and the bottom line when it reports first-quarter 2021 results on May 4. The Zacks Consensus Estimate for first-quarter earnings has moved up by 3 cents over the past 30 days to $2.72 per share, calling for growth of more than 40% from the prior-year quarter’s tally. Moreover, the consensus estimate for quarterly revenues is pegged at $287 million, suggesting an increase of more than 60% from the prior-year figure.

We note that this manufacturer and distributor of weight loss, weight management and healthy living products has a trailing four-quarter earnings surprise of 17.4%, on average.

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. Moreover, its focus on developing tools and programs to increase the efficiency of coaches has been working well. A rise in total active earning OPTAVIA coaches as well as average revenue per active earning OPTAVIA coach has been boosting the company’s results. In addition, the company has been enhancing its supply-chain capabilities to meet demand across key items alongside strengthening operational optimization in all areas of the manufacturing and distribution network.

Furthermore, Medifast is focused on making technological investments, as part of which its OPTAVIA Coach Connect app and the OPTAVIA Client app are noteworthy. All the aforesaid strengths have most likely aided the company’s performance in the to-be-reported quarter. At its fourth-quarter conference call, management cited that the year-over-year top-line growth trend in January 2021 was in line with or even better than the trend witnessed in the fourth quarter.

That being said, the company has been witnessing increased SG&A expenses for a while now, mainly owing to higher OPTAVIA commission costs. The escalated OPTAVIA commission costs stem from higher OPTAVIA sales and greater salaries and benefits. At its fourth-quarter conference call, management stated that it will make further investments in the supply chain and technology.

What the Zacks Model Unveils

Our proven model predicts 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 INC Price and EPS Surprise

 

MEDIFAST INC Price and EPS Surprise

MEDIFAST INC price-eps-surprise | MEDIFAST INC Quote

Medifast has a Zacks Rank #2 and an Earnings ESP of +6.25%.

Other Stocks Likely to Beat Earnings Estimates

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

Sysco (SYY - Free Report) has an Earnings ESP of +5.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The J.M. Smucker (SJM - Free Report) has an Earnings ESP of +1.49% and a Zacks Rank #3.

Nomad Foods (NOMD - Free Report) has an Earnings ESP of +0.73% and a Zacks Rank #3.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>