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Nutrisystem, Inc. Message Board

  • droidboy99 droidboy99 Nov 5, 2013 6:46 AM Flag

    Time to sell?

    Here today, gone tomorrow

    Somehow I seem to find myself in this position about every two years, but once again, let's welcome weight-loss specialist Nutrisystem (NASDAQ: NTRI ) to the list of companies you may be better off selling.

    Following Nutrisystem's third-quarter results a lot of you might be wondering why I'd suggest putting this weight-loss meal planning stock back on grocery shelves. For the quarter, Nutrisystem delivered 5% year-over-year revenue growth to $85.4 million while producing $0.15 in EPS which was 50% ahead of its adjusted EPS last year. Both figures were nicely ahead of Wall Street's forecast and could signal that the company's turnaround is occurring quicker than anyone expected. In addition, Nutrisystem has been testing out new partnerships with Target and Wal-Mart in an attempt to improve ongoing sales.

    However, there's one issue with Nutrisystem that has always made it a short-sale candidate in my book -- and it's a concern that I'm not sure how it will ever solve. This involves Nutrisystem's lack of customer loyalty. Most people who try to lose weight on Nutrisystem's plan only stick around for three months or less and are generally out to lose a few pounds. In other words, Nutrisystem's model is rarely going to breed lifetime members, which can lead to erratic cash flow and profits, as we've seen in the past.

    Another factor that needs to work perfectly in Nutrisystem's favor is consumer confidence. Weight-control companies like gyms and weight-loss health planners often see sales dive when consumer confidence is falling because users view them as easily expendable. Although consumer confidence peaked earlier this year, it fell dramatically in October and that could be a sign that consumers are getting ready to tighten their wallets once again.

    Time and again I've heard that this could be the moment when Nutrisystem gets its act together, but a long history of ups and downs suggests otherwise.

    Seth Williams

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    • The Motley Fool has been calling to sell NTRI since at least $10. I have yet to see a decent analysis but if they continue to recommend selling long enough, they will be right sooner or later. A broken clock is right twice/day.

      The biggest complaint of this guy is the lack of lifetime members. Duh, who joins anything for a lifetime? And if I thought I had to join a diet company for a lifetime, then right away that would be a red flag for a scam that doesn't work. There is actually a huge potential market out there for irregular clients which has never been properly accessed from what I see.

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