Medifast costs you less to eat per day than shopping at a grocery store. Now with so many daily activities on a dieter’s plate, one less thing they’ll have to worry about is the cost of the Medifast Program. Consumers and Dieters are at the proverbial edge of the cliff in regards to how much they have to spend using their disposable income. Disposable income has been slashed and more discretion has been emphasized on our parts, resulting in fewer dollars behind fewer favorite products. Just today, Jamie Dimon warned of the current state of the economy as in a recession. Not to cheerful to say the least. However, one thing is for certain, in a very competitive Diet Management market winners may still arise in turbulent times. In these so called sluggish times, Medifast proved to stand the fierce headwinds while reporting a 19th consecutive profitable quarter.
Medifast grew revenues 25% from the prior year’s period and reported $.10 in EPS. A penny below consensus but still reaffirming guidance, the company looks forward to a robust EPS growth in the following two quarters.
What Will Take Shape:
Ad spending has been weighing heavily on the bottom line and that’s why we’re seeing sluggish EPS growth. Spending is forecasted to be anywhere from $18M-$18.5M for the year. Now the company forecasts 30-35% EPS growth for the year. But how can that be when first quarter EPS growth remains on a flat line. Starting next quarter into the remainder of the year, especially Q4, EPS growth will explode due to the efficient use of money spent on advertising. If we use less money to promote, but the costumers are still flocking in to buy the product, we are essentially earning more profits. This will be reflected in the stock price as I see it going to $6 by next reporting date in August.
Fellas i have a lot more i can write, but give me some comments.
CHEERS!
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