Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of diet expert NutriSystem
So What: Frankly, NutriSystem's third quarter didn't look all that great to me. Sure, earnings per share were up 19% year-over-year, but that was driven by a lower tax rate, belt-tightening on the expense line, and a smaller share base. Don't get me wrong, more efficient operations and share buybacks are positives, but declining sales -- which missed analysts' estimates -- and operating income that edged up a mere 1.4% from the prior year are not terribly encouraging.
Now What: The fact remains that per-share profit beat analysts' estimates and, more importantly, the company raised its guidance for full-year results. That's a sure-fire recipe for investor excitement. And there's good reason to believe that an improving economy could bring consumers back to NutriSystem's products. However, the company does battle in a cutthroat industry that includes competitors like Medifast