Yahoo Finance Medifast (MED) Stock Down Despite Q4 Earnings, Sales Beat
Medifast, Inc. MED delivered fourth-quarter 2022 results, wherein the top and bottom lines beat the Zacks Consensus Estimate and the latter increased year over year.
However, results were somewhat hurt by reduced Coach productivity and cost inflation. Also, the company’s revenues and earnings per share (EPS) guidance for the first quarter of 2023 indicate a decline from the year-ago period. Shares of the company tumbled 9.2% in the after-market trading session on Feb 21.
Quarterly Highlights
Medifast’s adjusted earnings rallied 27.1% to $3.70 per share in the fourth quarter, which surpassed the Zacks Consensus Estimate of $2.18.
Net revenues of $337.2 million beat the Zacks Consensus Estimate of $306.7 million, but declined 10.7% year over year due to reduced Coach productivity. The total number of active earning OPTAVIA Coaches rose 1.8% year over year to 60,900. The average revenue per active earning OPTAVIA Coach was $5,538 compared with $6,321 reported in the year-ago quarter.
MEDIFAST INC Price, Consensus and EPS Surprise
MEDIFAST INC price-consensus-eps-surprise-chart | MEDIFAST INC Quote
The adjusted gross profit fell 11.7% to $245.8 million and the adjusted gross margin contracted 80 basis points (bps) to 72.9%. The downside could be accountable to higher inflation cost which was partially offset by lower shipping cost and effective pricing changes.
Adjusted SG&A expenses came in at $192.5 million, down 16.8% year over year. As a percentage of revenues, adjusted SG&A expenses contracted 420 bps to 57.1%.
The adjusted income from operations declined 13.7% to $53.3 million. As a percentage of revenues, the metric increased 340 bps to 15.8%.
Other Financial Updates
This Zacks Rank #3 (Hold) company concluded the quarter with cash, cash equivalents and investment securities of $87.7 million, no interest-bearing debt (as of Dec 31) and total shareholders’ equity of approximately $155 million.
The company declared a quarterly cash dividend of $1.64 per share, which was paid on Feb 7, 2023, to shareholders of record as of Dec 20.
Guidance
Management believes that macroeconomic impact will still impact customer acquisition and anticipate first-quarter 2023 revenues in the range of $300-$320 million.
The company’s revenues came in at $417.6 million in the first quarter of 2022.
The company expects first-quarter 2023 EPS in the band of $1.75-$2.40, compared with $3.59 reported in the first quarter of 2022.
The company assumes that the effective tax rate to be between 26% and 27% in the first quarter of 2023.
Medifast shares have declined 12.4% in the past three months compared with the industry’s dip of 3.5%.
Other Staple Stocks to Consider
Some top-ranked stocks from the sector are Lamb Weston LW, Post Holding POST and Conagra Brands CAG.
Lamb Weston, a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 52.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LW’s current financial-year sales and earnings suggests growth of 19.3% and 89.9%, respectively, from the year-ago reported numbers.
Post Holdings, which is a consumer-packaged goods company, sports a Zacks Rank #1 at present. Post Holdings has a trailing four-quarter earnings surprise of 34.8%, on average.
The Zacks Consensus Estimate for POST’s current financial-year sales and earnings suggests growth of 1.6% and 111.3%, respectively, from the year-ago reported numbers.
Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank #1. CAG has a trailing four-quarter earnings surprise of 8.9%, on average.
The Zacks Consensus Estimate for CAG’s’ current financial-year sales and EPS suggests growth of 7.2% and around 12.7%, respectively, from the corresponding year-ago reported figures.
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