Medifast Inc. Third Quarter Earnings Sneak Peek

Medifast, Inc. (NYSE:MED) will unveil its latest earnings on Monday, November 5, 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 analyst estimate is for net income of 40 cents per share, a rise of 11.1% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved up from 39 cents. Between one and three months ago, the average estimate moved up. It has been unchanged at 40 cents during the last month. Analysts are projecting profit to rise by 5.3% compared to last year’s $1.38.

Past Earnings Performance: Last quarter, the company topped expectations by 10 cents, coming in at profit of 47 cents per share versus a mean estimate of net income of 37 cents per share. This followed two straight quarters of missing estimates.

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A Look Back: In the second quarter, profit fell 52.7% to $2.8 million (20 cents a share) from $5.9 million (41 cents a share) the year earlier, but exceeded analyst expectations. Revenue rose 19.6% to $93.6 million from $78.3 million.

Wall St. Revenue Expectations: Analysts predict a rise of 18.3% in revenue from the year-earlier quarter to $90 million.

Stock Price Performance: Between August 6, 2012 and October 30, 2012, the stock price fell $2.50 (-8.9%), from $28.17 to $25.67. 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:

With double-digit revenue growth the past four quarters, this earnings release is a chance to keep that positive trend going. The company has averaged year-over-year revenue growth of 15.7% over the last four quarters.

The company is trying to stem some negative momentum heading into this earnings announcement. Profit has dropped by a year-over-year average of 41.9% over the past four quarters.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.59 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 2.76 in the first quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 11.6% to $30.6 million while assets rose 4.9% to $79.5 million.

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

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

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