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Medifast (MED) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research

Medifast (MED) closed the most recent trading day at $127.29, moving -1.76% from the previous trading session. This change lagged the S&P 500's 0.22% gain on the day. Meanwhile, the Dow gained 0.15%, and the Nasdaq, a tech-heavy index, added 0.6%.

Coming into today, shares of the weight-loss company had lost 2.42% in the past month. In that same time, the Consumer Staples sector gained 4%, while the S&P 500 gained 2.39%.

MED will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.52, up 50.5% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $151.70 million, up 53.85% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.52 per share and revenue of $709.20 million. These totals would mark changes of +41.13% and +41.56%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for MED. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. MED is currently sporting a Zacks Rank of #1 (Strong Buy).

Valuation is also important, so investors should note that MED has a Forward P/E ratio of 19.87 right now. This represents a premium compared to its industry's average Forward P/E of 18.28.

It is also worth noting that MED currently has a PEG ratio of 0.99. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Food - Miscellaneous was holding an average PEG ratio of 2.27 at yesterday's closing price.

The Food - Miscellaneous industry is part of the Consumer Staples sector. This industry currently has a Zacks Industry Rank of 93, which puts it in the top 37% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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