U.S. Markets closed

Medifast (MED) Q3 Earnings: Coaches & OPTAVIA are Key Drivers

Zacks Equity Research
1 / 2

Medifast (MED) Q3 Earnings: Coaches & OPTAVIA are Key Drivers

Medifast's (MED) Q3 performance to gain from a sturdy coach base and advancement in the OPTAVIA brand.

Medifast, Inc MED is scheduled to release third-quarter 2018 results on Nov 6, after market close. Earnings of this renowned weight management and nutritional products company beat the Zacks Consensus Estimate in the past 10 quarters. Moreover, revenues surpassed estimates in the trailing four quarters. The company’s top- and bottom-line performances have been impressive on a year-over-year basis.

Let’s see how things are shaping up prior to the upcoming quarterly announcement and discuss if the company can sustain robust performance trend.

Sturdy Increase in Coaches: A Key Catalyst  

Medifast relies on earning coaches for revenue generation. Coaches not only form a vital sales channel, but also act as advisors to clients and help reach out to new customers by generating awareness regarding products and health programs. Notably, the company is steadily gaining from growth in active earning coaches base.  In fact, during the second quarter of 2018, active earnings coaches increased almost 46% to 19,700. Also, in the said period, average revenues generated by these coaches increased 16.1% to reach $5,474. This substantially aided top-line growth. Moreover, the company is on track with training and development of coaches to continue enhancing their productivity.

Growth in OPTAVIA Likely to Sustain

Medifast has been steadily gaining from the OPTAVIA brand for a while. The brand represented almost 64% and 58% of the company’s consumable unit sales during the second and the first quarters of 2018, respectively. The brand is supported by approximately 71 SKUs, which aids the company’s coaches to reach out to clients effectively and boost revenues. Further, the company engages in holding conventions, specifically focusing on the OPTAVIA brand that helps training new coaches and discussing strategies for sustaining growth. Such endeavors are likely to continue aiding advancement of the OPTAVIA brand and fuel the company’s top-line performance.

MEDIFAST INC Price, Consensus and EPS Surprise

 

MEDIFAST INC Price, Consensus and EPS Surprise | MEDIFAST INC Quote

 

Other Strategic Efforts

Consumers’ growing inclination toward health and fitness encourages Medifast to continue investing toward growth of its brands and tap into the rising demand for healthy products. In this respect, management is on track with strengthening the e-commerce platform through technological upgradations. Further, the company is on track with augmenting distribution base. In fact, a new distribution center was opened during the second quarter in Nevada. Apart from these, Medifast is also on track with expanding business internationally, especially in the Asian markets.

Estimates Unveil Bright Prospects

We expect the aforementioned factors to continue aiding Medifast’s performance in the upcoming quarterly release. In fact, such endeavors are anticipated to help the company in cushioning the hurdles related to rising expenses, stemming primarily from growing client base and higher discounts.

Incidentally, Management expects revenues for the third quarter in the range of $120-$125 million, depicting growth from $77 million in the prior-year quarter. The Zacks Consensus Estimate for revenues for the third quarter is currently pegged at $125 million.

Additionally, the Zacks Consensus Estimate for earnings for the impending quarter is currently pegged at $1.15, reflecting an improvement from 55 cents reported in the year-ago quarter. This estimate has been stable in the past 30 days. Further, management predicts earnings for the quarter under review in the range of $1.05-$1.10.

What Does the Zacks Model Predict?

Our proven model doesn’t show that Medifast can beat bottom-line estimates this quarter. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Medifast currently carries a Zacks Rank #3, its Earnings ESP of 0.00% reduces chances of an earnings beat.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Earnings Estimates

Here are a few companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat:

The Hain Celestial Group, Inc HAIN has an Earnings ESP of +5.66% and a Zacks Rank #3.

Nu Skin Enterprises, Inc NUS has an Earnings ESP of +0.21% and a Zacks Rank #3.

Turning Point Brands, Inc TPB has an Earnings ESP of +8.74% and a Zacks Rank #3.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Nu Skin Enterprises, Inc. (NUS) : Free Stock Analysis Report
 
MEDIFAST INC (MED) : Free Stock Analysis Report
 
The Hain Celestial Group, Inc. (HAIN) : Free Stock Analysis Report
 
Turning Point Brands, Inc. (TPB) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.