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Medifast's (MED) Q1 Earnings Top Estimates, Sales Decline Y/Y
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Medifast, Inc. (MED - Free Report) delivered first-quarter 2023 results, with the bottom-line increasing year over year and beating the Zacks Consensus Estimate. However, the top line declined year over year.
Quarterly Highlights
Medifast’s adjusted earnings came in at $3.67 per share, up from $3.59 million reported in the year-ago quarter. The metric surpassed the Zacks Consensus Estimate of $2.40 and our estimate of $2.12 a share.
Net revenues of $349 million declined 16.4% year over year mainly due to the reduced number of active earning OPTAVIA Coaches and lesser Coach productivity relative to the year-ago quarter. The average revenue per active earning OPTAVIA Coach stood at $5,945, down 9% from $6,536 million thanks to persistent pressure on customer acquisition. The total number of independent active earning OPTAVIA Coaches fell 8.1% to 58,700 compared with 63,900 reported in the year-ago quarter. The top line surpassed our estimate of $314.7 million.
The gross profit came in at $246.4 million, down 18.5% year over year on reduced revenues and higher cost inflation in raw ingredients, shipping and labor. Gross profit margin was 70.6%, down from 72.4% reported in the prior-year quarter on product cost inflation among other reasons.
Selling, general and administrative expenses (SG&A) fell 22% year over year to $192.9 million. As a percentage of revenues, SG&A expenses contracted 390 basis points (bps) to 55.3%. The reduction in SG&A expenses is a result of progress on various cost reduction and optimization efforts and lower coach compensation, stemming from reduced sales volumes and lesser active earning coaches.
The income from operations declined 2.9% to $53.5 million. As a percentage of revenues, the metric increased 210 bps to 15.3%.
Other Financial Updates
Medifast concluded the quarter with cash and cash equivalents of $123.7 million, no interest-bearing debt (as of Mar 31, 2023) and total shareholders’ equity of approximately $170.9 million.
The company declared a quarterly cash dividend of $1.65 per share, payable on May 9, 2023, to shareholders of record as of Mar 28.
Image Source: Zacks Investment Research
Guidance
Management expects second-quarter 2023 revenues in the range of $250-$270 million. The company expects earnings per share (EPS) in the range of $1.32-$1.44 for the second quarter. The company assumes that the effective tax rate to be between 24.50% and 26.25% in the second quarter of 2023.
The Zacks Rank #4 (Sell) company shares have declined 25.2% in the past three months against the industry’s growth of 5.8%.
Lamb Weston, which operates as a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggests increases of 29.6% and 116.8%, respectively, from the year-ago reported number.
General Mills, a branded consumer food company, currently carries a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the year-ago reported figures.
Conagra Brands, operating as a consumer-packaged goods food company, currently carries a Zacks Rank #2. CAG has a trailing four-quarter earnings surprise of 13.2%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current fiscal-year sales and earnings suggests improvements of 7.1% and 16.5%, respectively, from the year-ago reported number.
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Medifast's (MED) Q1 Earnings Top Estimates, Sales Decline Y/Y
Medifast, Inc. (MED - Free Report) delivered first-quarter 2023 results, with the bottom-line increasing year over year and beating the Zacks Consensus Estimate. However, the top line declined year over year.
Quarterly Highlights
Medifast’s adjusted earnings came in at $3.67 per share, up from $3.59 million reported in the year-ago quarter. The metric surpassed the Zacks Consensus Estimate of $2.40 and our estimate of $2.12 a share.
Net revenues of $349 million declined 16.4% year over year mainly due to the reduced number of active earning OPTAVIA Coaches and lesser Coach productivity relative to the year-ago quarter. The average revenue per active earning OPTAVIA Coach stood at $5,945, down 9% from $6,536 million thanks to persistent pressure on customer acquisition. The total number of independent active earning OPTAVIA Coaches fell 8.1% to 58,700 compared with 63,900 reported in the year-ago quarter. The top line surpassed our estimate of $314.7 million.
MEDIFAST INC Price, Consensus and EPS Surprise
MEDIFAST INC price-consensus-eps-surprise-chart | MEDIFAST INC Quote
The gross profit came in at $246.4 million, down 18.5% year over year on reduced revenues and higher cost inflation in raw ingredients, shipping and labor. Gross profit margin was 70.6%, down from 72.4% reported in the prior-year quarter on product cost inflation among other reasons.
Selling, general and administrative expenses (SG&A) fell 22% year over year to $192.9 million. As a percentage of revenues, SG&A expenses contracted 390 basis points (bps) to 55.3%. The reduction in SG&A expenses is a result of progress on various cost reduction and optimization efforts and lower coach compensation, stemming from reduced sales volumes and lesser active earning coaches.
The income from operations declined 2.9% to $53.5 million. As a percentage of revenues, the metric increased 210 bps to 15.3%.
Other Financial Updates
Medifast concluded the quarter with cash and cash equivalents of $123.7 million, no interest-bearing debt (as of Mar 31, 2023) and total shareholders’ equity of approximately $170.9 million.
The company declared a quarterly cash dividend of $1.65 per share, payable on May 9, 2023, to shareholders of record as of Mar 28.
Image Source: Zacks Investment Research
Guidance
Management expects second-quarter 2023 revenues in the range of $250-$270 million. The company expects earnings per share (EPS) in the range of $1.32-$1.44 for the second quarter. The company assumes that the effective tax rate to be between 24.50% and 26.25% in the second quarter of 2023.
The Zacks Rank #4 (Sell) company shares have declined 25.2% in the past three months against the industry’s growth of 5.8%.
Solid Consumer Staple Picks
Some better-ranked consumer staple stocks are Lamb Weston (LW - Free Report) , General Mills (GIS - Free Report) and Conagra Brands (CAG - Free Report) .
Lamb Weston, which operates as a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggests increases of 29.6% and 116.8%, respectively, from the year-ago reported number.
General Mills, a branded consumer food company, currently carries a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the year-ago reported figures.
Conagra Brands, operating as a consumer-packaged goods food company, currently carries a Zacks Rank #2. CAG has a trailing four-quarter earnings surprise of 13.2%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current fiscal-year sales and earnings suggests improvements of 7.1% and 16.5%, respectively, from the year-ago reported number.