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Medifast, Inc. MED is likely to register top and bottom-line growth, when it reports second-quarter 2021 numbers on Aug 4. The Zacks Consensus Estimate for revenues currently stands at $366 million, suggesting a surge of 66.4% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for earnings has gone up a cent over the past 30 days to $3.30 per share, which suggests growth of 68.4% from the figure reported in the prior-year period. This manufacturer and distributor of weight loss, weight management and healthy living products has a trailing four-quarter earnings surprise of 12.7%, on average. In the last reported quarter, Medifast posted an earnings surprise of 27.2%.
MEDIFAST INC Price, Consensus and EPS Surprise
MEDIFAST INC price-consensus-eps-surprise-chart | MEDIFAST INC Quote
Key Factors to Note
The company has been gaining on strength in its OPTAVIA lifestyle solution and coaching support system, thanks to consumers’ rising inclination toward health. OPTAVIA follows a holistic approach by focusing on six key areas of a human being, namely weight, eating and hydration, motion, sleep, mind and surroundings. Further, OPTAVIA combines scientifically-proven programs, effective products and guidance from its coaches to help consumers lead a healthier lifestyle. The relevance of the company’s offerings amid an environment where consumers are choosing health and wellness options has been an upside.
Medifast has been undertaking a number of measures to drive growth. The company has been speeding up its long-term supply-chain efforts to ensure that it is able to manage the expected growth. To this end, Medifast is focused on optimizing and increasing capacity by strengthening its network of co-manufacturers. Further, the company is expanding its distribution network via expansions in existing facilities, along with building on current 3PL relationships and alliances to set up a distribution system, which is in line with its manufacturing capacity.
Apart from these, Medifast is focused on making technological investments, as part of which it opened a new technology center in Utah in 2020 beginning. We note that OPTAVIA Coaches have been focused on utilizing technology, including the company’s own app-based platforms, along with social media channels and field-led training platforms. The company’s constant investments in digital tools, as well as in its new, fully integrated mobile apps are aimed at enhancing the connection between clients and coaches.
That said, Medifast has been seeing high SG&A expenses for a while now, mainly owing to higher OPTAVIA commission costs. Management on its last earnings call stated that it expects second-quarter gross margin to witness pressure from continued accelerated shipments, as the company expands distribution capacity.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Medifast this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Medifast currently has a Zacks Rank #2 and an Earnings ESP of +7.27%.
Other Stocks With Favorable Combinations
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season.
B&G Foods, Inc. BGS currently has an Earnings ESP of +6.82% and a Zacks Rank of 3.
Kellogg K has an Earnings ESP of +0.61% and a Zacks Rank #3.
Tyson Foods, Inc. TSN currently has an Earnings ESP of +11.17% and a Zacks Rank of 3.
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MEDIFAST INC (MED) : Free Stock Analysis Report
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