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Medifast's (MED) Q3 Earnings Upcoming: Things Worth Noting

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Medifast, Inc. (MED - Free Report) is likely to register a decrease in its bottom line from the respective year-ago fiscal quarter’s reading when it reports third-quarter 2022 earnings on Nov 3.

The Zacks Consensus Estimate for quarterly earnings has increased from $1.85 to $1.91 in the past 30 days. However, this indicates a decline of 46.4% from the figure reported in the prior-year fiscal quarter.

The manufacturer and distributor of weight loss, weight management and healthy living products has a trailing four-quarter earnings surprise of 12.4%, on average. MED delivered an earnings surprise of almost 18% in the last reported quarter.

MEDIFAST INC Price, Consensus and EPS Surprise

MEDIFAST INC Price, Consensus and EPS Surprise

MEDIFAST INC price-consensus-eps-surprise-chart | MEDIFAST INC Quote

Factors to Consider

Medifast’s gross margin has been contracting year over year for the past few quarters now.

In the second quarter of 2022, Medifast’s gross profit, as a percentage of revenues, came in at 71%, down from the 74.5% reported in the second quarter of 2021. The downside can be attributed to a customer acquisition program and increased product costs stemming from inflation in raw ingredient costs.

On its second-quarter 2022 earnings call, management stated that it expects short-term margin pressure in 2022 due to inflation and continued investments related to technology and supply-chain infrastructure. These raise concerns for the quarter under review.

In the second quarter of 2022, adjusted SG&A expenses came in at $263.3 million, up $31 million year over year. The increase was mainly led by escalated OPTAVIA Coach compensation expenses, additional costs associated with continued investments in information technology and distribution infrastructure and a rise in credit card fees. Management expects increased SG&A expenses in the third quarter.

Medifast has been benefiting from its OPTAVIA lifestyle solution and coaching support system. Strategies, including driving product and program innovation, expanding segments and geographies, improving coach and client experiences, utilizing deeper data and insights and optimizing operational effectiveness, bode well.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Medifast this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

Medifast has a Zacks Rank #2 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are some companies worth considering as our model shows that these have the right combination of elements to beat earnings this season.

The Hershey Company (HSY - Free Report) currently has an Earnings ESP of +2.02% and a Zacks Rank #3. HSY is likely to register a top-line improvement when it reports third-quarter 2022 numbers. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Hershey’s quarterly revenues is pegged at $2.6 billion, which indicates an improvement of around 11% from the figure reported in the prior-year fiscal quarter.

The Zacks Consensus Estimate for the quarterly EPS of $2.07 suggests a 1.4% decline from the figure reported in the year-ago fiscal quarter. HSY has a trailing four-quarter earnings surprise of 8.7%, on average.

Kellogg Company (K - Free Report) currently has an Earnings ESP of +1.35% and a Zacks Rank of 3. K is expected to register top-line growth when it reports third-quarter 2022 numbers.

The Zacks Consensus Estimate for Kellogg's quarterly revenues is pegged at $3.8 billion, which suggests growth of nearly 4% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for Kellogg's quarterly earnings has remained stable in the past 30 days at 96 cents per share, suggesting a decline of 11.9% from the year-ago quarter’s tally. K delivered an earnings beat of 13.3%, on average, in the trailing four quarters.

The J. M. Smucker (SJM - Free Report) currently has an Earnings ESP of +1.06% and a Zacks Rank of 3. SJM is expected to register a top-line increase when it reports second-quarter fiscal 2023 numbers.

The Zacks Consensus Estimate for The J. M. Smucker’s quarterly revenues is pegged at $2.2 billion, which suggests an increase of 5.2% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for The J. M. Smucker’s quarterly earnings has risen by a penny in the past seven days to $2.17 per share, suggesting a fall of 10.7% from the year-ago quarter’s tally. SJM delivered an earnings beat of 20.8%, on average, in the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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