Interesting pattern of insider trading in August. Top management are all buying: Zier, Krausz, and Monahan. Two non-management directors are selling: Zarilli and Tierney.
If Zarilli and Tierney are on their way out, that's not a bad thing. Apparently Tierney has a fan club of one member, himself. Zarrilli has involvement on 'way too many boards to be of much use to NTRI.
If these buying and selling events are indicative of a shift in the board away from Zarrilli and Tierney, and the continued ascendance of the three top managers, it's a good trend!
I haven't seen an explanation as to why management guided lower in Q3, but this could be a clue in an article from last week:
"NUTRISYSTEM plans to roll out versions of the 5-day kit at Sam’s Club and Target Corp. in the coming months."
I was under the impression, if I recall, that Target would be rolled out earlier this year. The above statement would imply that Q4 is more likely for the roll out. A delay in these two major initiatives would no doubt result in an impact on Q3 sales guidance. My guess is that they would likely have had 1-2% of sales projected in Q3 for Sam's and Target had they been rolled out by July 1.
Rational minds are back in the market. NTRI up a bit while the NASDAQ is getting killed. Should see a near term recovery to $17 unless the overall market is starting a major pullback.
Definitely an overreaction unless there is something fundamental behind the guidance change that will impact company sales for a longer term. Q3 2014 is still looking like an excellent quarter, far better than Q3 2013.
There is really no reason for this not to recover from what I can see so far.
Top management was replaced just under two years ago, including marketing. They have taken a company with fast shrinking sales and turned it around to sales growth. The company is both developing new products and increasing their lines of distribution. Beside adding Wal-Mart last year, they have others they are working with on the retail side such as Target if I recall. Retail store sales is new for them and still a small part but growing of their sales though.
Share price has reflected this remarkable turnaround when the price was near $6 just over a year ago. Management has done a great job with this company in a very short period of time.
Buybacks don't always work well. I would prefer that they start to use their bulging bank account to give me the money......an increase in dividend. Management is claiming to be in growth mode now, and with nearly $40 million in cash right now, it's time for them to demonstrate that they have more confidence in the future than today's traders worrying over the 3rd Qtr guidance. The fact is, EPS in the 3rd qtr of 2013 was .01 and they are forecasting .12 to .17 earnings per share for 3rd qtr 2014. That's a pretty robust bounce back!
Their current cash holding hasn't been this good for a long time......going back to 2011 I think. With nearly $40 million in cash plus and short term investments, now plus a nice addition from 3rd qtr profits, they have to start looking at what they should do with cash. They should bump the dividend to at least $1.00 annually which would only cost them an extra $7million/year....easily manageable if they continue to grow as they are. The market would love it.
Regardless, NTRI looks like a great buy at $16.
I would suggest today's "breakdown" had a lot more to do with a Malaysian jet being shot down over the Ukraine than to do with the performance or outlook of the company.
Traditionally it can get a bit feverish in expectation of good earnings, plus the fact that it is getting closer to a dividend declaration so that could happen in the next week or so. So if the market shakes off the Ukraine and the invasion of Gaza, it will be back to business as usual. If not, and earnings are tepid, this stock could dip below $16 again easily. Things will become a bit more clear in about 10 days.
Ok, so much for the underperformance. The stock is in a breakout pattern to the upside, and the chances of seeing new highs with good results at the end of July now looks more likely. It could happen sooner if there is enough speculative froth that sales and profits have smashed the guidance.
So much for underperformance. There has been a very strong performance this week and I don't know what just happened before the close today but the stock is gearing up for a breakout. Remember that it hit $17.90 in after-hours trading just after the last quarter results and has been my target for a breakout ever since. It fell off quite a bit from that $17.90 but now ready to smash it if the trend continues.
Looking really good for the possibility of new highs in the next quarter if the results at the end of the month are stellar.
Showing a lot of strength today to hold its own when the Nasdaq is getting completely hammered. We have often seen strong patterns emerge in the run-up to the financials and dividend declaration. Let's hope this is a good sign today.
NTRI is lagging the relentless market rise over the last month. A big NASDAQ rise today should normally mean an even bigger rise in NTRI. Not so. That means the market wants confirmation that the company is in a growth pattern.
We will have to wait until the end of July for the verdict on sales and profit performance. Here is what I can see happening. If the company performs according to guidance, we should see the stock move to over $18 and settle in a range between $17-$19.. However, if it beats guidance noticeably, the pent up potential of this stock will see a fast rise, probably above $22. It could even go higher in August is the overall market stays strong. If they fall short of guidance, it will probably slide back to $16 or under, producing a higher dividend yield.
In an interview on June 6th, CEO Zier let the cat out of the bag. She spoke of her turnaround strategy from last year and then stated ".....and now we're in growth mode". That is the first that I have heard of this terminology being used and affirmed by Ms.Zier as most talk up to now has been about making a turnaround.....and now it is here apparently. She won't be pulling that "growth mode" phrase out of thin air, but she clearly will have knowledge of solid sales numbers to back that up.
This is what investors have been waiting for.....evidence that NTRI has started to become a growth company.
The interview can be heard on audio on the MarketWatch site.
Just remember that it was $20 just a couple of years ago. It can go to $20 again in a hurry if circumstances change. I doubt it will take 5 years.
Management is mediocre which doesn't help much. The bonehead Cote purchase will be a long drag on the company, and Niobec doesn't help either. However, they have some really interesting stuff happening in Western Mali/ eastern Senegal exploratory projects which could be a company-maker. They are uncovering some low cost deposits in Boto and nearby with their Merrex JV. They will be mining big volumes of gold out of that area for many years to come.
I have a feeling IAG will have its day when the stars align with a higher gold price, an investor for Niobec, and some great production out of Mali and Senegal. Buy at $4 today and cash out at $20 in less than 5 years.
A small beat will keep the stock under $19. It will take a big beat to get it into new 52 week territory, but a big beat is due either this quarter or next, given all the initiatives undertaken by this talented management team.
Good possibility there. They have been wanting to dump that dog for quite awhile and they don't have the financial power to move it forward properly. I'm sure a different operator will do well with the Niobium mine while IAG gets back to gold.
Anglo Ashanti are definitely good candidates, as is Randgold. Another scenario is that IAG is interested in selling Boto to raise cash for other needs. Fekola looks like a big winner for B2Gold so there is no reason why Boto wouldn't be worth $600million too (just a guess there) and that would be a welcome sight for IAG who could use the cash.
IAG foolishly (in my opinion) bought the overpriced Cote Lake solely to answer criticisms that they were too concentrated in Africa. Obviously geopolitical diversification is important, but you don't rush in and pay too much for something just to satisfy the critics. Now that Boto is looking like a big thing, they may still be spooked about too much going on in Africa and could be interested in selling the property to an African company who is more experienced on that continent.
I'm not sure of the average cost as the acquisitions came at different values over time. The last outright cash acquisition was around .50 compared to the current .07. That was about the top value they paid. My guess on the average acquisition cost would be in the .20-.30 range but I would have to do some research to come up with a reliable number.
If Fekola and Boto prove to extend into Merrex's Diahka permit, you will see some opportunity for a multil-bagger return because the market cap of Merrex is so small. I am a shareholder of Merrex and a lot of the current shareholders (I know quite a few of them), are hoping for .20/share in the next few months based on upcoming drill results which will allow them to raise funds for 2014 and 2015 drilling at a reasonable cost. Of course, if IAG gets taken out in the meantime by a major like Newmont, that would be extremely bullish for Merrex since Newmont (or whomever) would clearly be interested in developing the low cost Boto mine asap and the Merrex property fits perfectly into the scenario.
IAG has deep value and is vulnerable to a takeover.
This week's takeover of Papillion by B2Gold is what sparked all this. Papillion has the Fekola deposit in Mali and got valued at $600 million, which is about 1/2 of IAG's market cap.......just for a piece of property! Now, IAG owns Boto, the southern extension of Fekola and it's looking prolific so far. In fact, IAG also owns more property even further south on the Fekola/Boto trend in a JV with tiny Merrex Gold (MXI Toronto Venture) who holds more property of the same trend.
Boto looks big and is now getting attention now that B2Gold (known as smart operators) have jumped into that deposit. It is an open pit mine so start up is cheap, probably around $200+ million.
Watch for Newmont to be looking around. There are others rumoured to be circling IAG as well. IAG is saddled with mediocre management that has negatively impacted the ability of the company to make money and/or smart deals. If IAG got scooped up at $5, the buyer will still be getting Boto for free. There is huge value there to get unlocked by a miner who knows what they are doing.
Speculation of a takeover of IAG was sparked by the merger of Papillion and B2Gold this week. IAG is drilling a whopping new discovery right next to Papillion's Fekola deposit in Mali. The market has never given IAG a nickel for their Boto discovery plus all their 50% JV property next door with Merrex Gold's Sirabaya property. The market is waking up to the worth of Boto alone which could add 50% to the current value of IAG.
The speculation is that Newmont or Randgold may be looking at paying cash for the Mali holdings or cheaper yet, buying IAG whole. Barrick and Independence Group are other possibilities.
For a potential double or triple gain, have a look at Merrex Gold MXI on Toronto's Venture. It has just doubled in the last week over their Mali property in JV with IAG and are still well undervalued. Once they are linked with Fekola, Boto in the same geological trend, this little company could be a 5-10 bagger.
It's all about the Papillion merger with B2Gold. The Papillon Fekola deposit in Mali was just evaluated at $600 million and IAG is in the midst of defining an extension to it in Boto. The potential there is just as big or bigger, considering IAG has a huge amount of property there, including their 50% JV with a little company called Merrex Gold which could soar if things heat up in the area. Anyway, this is all about speculation of a takeover of IAG. They are really undervalued right now because Boto is not getting any value in their share price at the moment so are really vulnerable to the big boys sniffing around such as Newmont. No doubt Newmont or Randgold would love to get Boto for free!