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Nutrisystem, Inc. Message Board

  • wilwal_1299 wilwal_1299 Jul 30, 2013 3:59 PM Flag

    Dividend valuation

    This stock should now be very attractive to income investors. The .70/year dividend is now starting to look secure which has been one of the biggest worries and reason for its previous selloff. Since stocks like this generally don't pay any more than 4% dividends, on that basis alone the stock should rise to $17.50. At a 3.5% yield, it is a $20 stock.

    If net income starts to exceed the payout significantly, this stock could return to $30 by 2015....which is where it once was in 2009 briefly. This time it is for real. This new management team seems to know where they are going and how they are going to get there.

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    • Look guys, while I'm very happy with this move, there is no way that this stock is going to move much further than this unless there is real revenue growth. You can't have continued moves up with the revenues going down and cost-cutting. While it's great that new management has been able to remove less profitable revenues and focus on improving margins, the next step is to have actual revenue growth. If that happens, the stock could REALLY take off.

      If not, the dividend will need to be cut and that won't be great.

      • 2 Replies to marklar_leader
      • Agree. Should be an interesting 3 months until the next report. The company could offer timely updates with positive news, like how well business is going at Walmart. The set up from a stock market perspective, acknowledging the large short position, is interesting to say the least.

      • Totally agree ML.

        They are doing this turnaround right though: start making money, then go for the volume as it rarely works well the other way around. The groundwork for revenue growth is being laid right now.

        Ms.Zier does speak in a bit of gobbledegook buzz words, but if you drill down in what she is saying, she indicates that the revenue turnaround will start to appear in the 3rdQ and become more evident in the 4thQ. She also talks about products and new markets in the pipeline for 2014 and 2015. When was the last time NTRI ever planned sales growth with specific initiatives that far in advance? Revenue growth for this team isn't a cross-your-fingers-and-hope situation, they are really proactive in all sorts of targets.

        Of course the proof of the pudding is always in the eating and it will take time to actually see the increasing sales numbers. As I mentioned in a previous post, share price will be dependant upon whether the market buys her story or will only buy the numbers after the fact. I can say that on Monday I was a skeptic "show me the numbers" guy on this, but today, I am more comfortable buying the story. I have to wonder if the market will be doing the same thing and bid this thing up before confirmation occurs. I don't know the answer to that but if 3rdQ gives a strong indication that revenue growth is there, I think the market will run it up to wherever it will level out to for awhile.

        More movement upward in the next 3 months and end of October for the next big move up, if it is going to happen at all.

 
NTRI
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