The 10-second takeaway
For the quarter ended March 31 (Q1), Medifast beat expectations on revenue and missed estimates on earnings per share.
Compared to the prior-year quarter, revenue improved significantly and GAAP earnings per share shrank significantly.
Margins shrank across the board.
Medifast booked revenue of $88.9 million. The six analysts polled by S&P Capital IQ anticipated sales of $86.6 million on the same basis. GAAP reported sales were 20% higher than the prior-year quarter's $74.3 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.32. The four earnings estimates compiled by S&P Capital IQ predicted $0.38 per share. GAAP EPS of $0.29 for Q1 were 34% lower than the prior-year quarter's $0.44 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 75.1%, 120 basis points worse than the prior-year quarter. Operating margin was 6.9%, 660 basis points worse than the prior-year quarter. Net margin was 4.5%, 410 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $90.3 million. On the bottom line, the average EPS estimate is $0.41.
Next year's average estimate for revenue is $345.8 million. The average EPS estimate is $1.26.
The stock has a two-star rating (out of five) at Motley Fool CAPS. Among 64 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 46 give Medifast a green thumbs-up, and 18 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Medifast is outperform, with an average price target of $19.14.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.