The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Medifast beat slightly on revenues and crushed expectations on earnings per share.
Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share grew significantly.
Margins expanded across the board.
Medifast chalked up revenue of $91.0 million. The four analysts polled by S&P Capital IQ foresaw sales of $89.7 million on the same basis. GAAP reported sales were 20% higher than the prior-year quarter's $76.1 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 $0.52. The five earnings estimates compiled by S&P Capital IQ averaged $0.40 per share. GAAP EPS of $0.52 for Q3 were 44% higher than the prior-year quarter's $0.36 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%, 90 basis points better than the prior-year quarter. Operating margin was 9.8%, 100 basis points better than the prior-year quarter. Net margin was 7.9%, 120 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $79.3 million. On the bottom line, the average EPS estimate is $0.19.
Next year's average estimate for revenue is $351.5 million. The average EPS estimate is $1.36.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 251 members out of 303 rating the stock outperform, and 52 members rating it underperform. Among 68 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 49 give Medifast a green thumbs-up, and 19 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 $29.60.
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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. The Motley Fool has no positions in the stocks mentioned above. 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.