Why Nutrisystem Stock Fell 12% in March

Investors sent shares lower on an expected sales growth slowdown in 2018.

Demitrios Kalogeropoulos
Demitrios Kalogeropoulos
Apr 9, 2018 at 9:30AM
Consumer Goods

What happened

Weight loss specialist Nutrisystem (NASDAQ:NTRI) shed 12% last month compared to a 3% decrease in the S&P 500, according to data provided by S&P Global Market Intelligence.

^SPX Chart

Data source: YCharts.

That decline left shares down by nearly 50% in the past 12 months, but still beating the market over the prior three-year and five-year time periods.

So what

March's slump came as investors continued adjusting their expectations for growth over the short term. In its fourth-quarter report issued in late February, management revealed solid sales gains and an encouraging uptick in profitability. However, the stock plunged following management's prediction that the top line might not improve at all in 2018.

A young woman eats a salad.

Image source: Getty Images.


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Now what

CEO Dawn Zier and her team are forecasting revenue of between $685 million and $705 million this year, compared to $697 million in 2017. The success of their revamped South Beach Diet offering will play a big role in determining whether revenue declines or expands modestly.

Nutrisystem also needs to find a popular and cost-effective marketing strategy that brings in enough new users to keep sales and profits churning higher. That goal is becoming a bit more challenging as ratings slip at major cable networks. Yet Nutrisystem has a huge potential market to target as consumers spent over $10 billion on weight management last year in the U.S.