Medifast Second Quarter Earnings Sneak Peek

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Medifast, Inc. (NYSE:MED) will unveil its latest earnings on Thursday, July 26, 2012. Medifast is engaged in the production, distribution, and sale of weight management and disease management products and other consumable health and diet products.

Medifast, Inc. Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for net income of 37 cents per share, a decline of 9.8% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from 41 cents. Between one and three months ago, the average estimate moved down. It has been unchanged at 37 cents during the last month. Analysts are projecting profit to rise by 6.1% compared to last year’s $1.23.

Past Earnings Performance: The company enters this earnings report having missed estimates the last four quarters. Last quarter, the company fell short of expectations by 5 cents, reporting profit of of 32 cents per share against a mean estimate of net income of 37 cents per share.

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A Look Back: In the first quarter, profit fell 37.2% to $4 million (29 cents a share) from $6.4 million (44 cents a share) the year earlier, missing analyst expectations. Revenue rose 19.7% to $88.9 million from $74.3 million.

Wall St. Revenue Expectations: Analysts predict a rise of 15.4% in revenue from the year-earlier quarter to $90.3 million.

Stock Price Performance: Between May 23, 2012 and July 20, 2012, the stock price had risen $2.63 (14.3%), from $18.33 to $20.96. The stock price saw one of its best stretches over the last year between February 2, 2012 and February 13, 2012, when shares rose for eight straight days, increasing 9.8% (+$1.57) over that span. It saw one of its worst periods between November 15, 2011 and November 25, 2011 when shares fell for eight straight days, dropping 15% (-$2.30) over that span.

Key Stats:

The company enters this earnings announcement with substantial revenue momentum. The company has averaged year-over-year revenue growth of 15.1% over the last four quarters.

After experiencing income drops the past three quarters, the company is hoping to use this earnings announcement to rebound. Net income fell 11.9% in the third quarter of the last fiscal year, by 65.8% in the fourth quarter of the last fiscal year and again in the first quarter.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.76 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company regressed in this liquidity measure from 3.16 in the fourth quarter of the last fiscal year to the last quarter driven in part by an increase in liabilities. Current liabilities increased 35.5% to $27.5 million while assets rose 18.4% to $75.8 million.

Analyst Ratings: With three analysts rating the stock as a buy, none rating it as a sell and three rating it as a hold, there are indications of a bullish outlook.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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