The company recently reported good numbers and beat the street estimates for the EPS. The EPS for 2013 is expected to be in the range of $0.27-0.35 compared to the Thomson Reuters consensus estimate of $0.32. Guidance for Q3'13 is for an EPS of $0.08-0.13. In Q2'13, though the revenues were down, the company managed a net profit of $6.36 million. The dividend yield is also above 6%. The cost rationalization efforts and increase in average selling price led to improvement in the earnings. The decline in topline is likely to be arrested in the future quarters as the company is focusing on diversifying sales channels, building the innovation pipeline, and developing new creative and programs for the 2014 diet season launch. So things are looking better for the company, and the possibility of profitability on a full year basis is very high now. Due to its strong position in the market, Nutrisystem is expected to leverage the growth in the diet market to its advantage soon. Once that happens, the future prospects will improve significantly. Growth in the market will only increase the competition. Players like Medifast (MED), Weight Watchers (WTW) are likely to get more aggressive. There is also competition from other segments like the drugs / supplements market. Chromadex Corporation (CDXC) has launched a vitamin derivative Nicotinamide Riboside for weight loss / diabetes management. The recent earnings have increased the positivity about Nutrisystem's future. Citigroup has a price objective of $15, up significantly from $10 earlier. As per the analysts at Citigroup, the management appears to be successfully engineering a turnaround, and the company is still in the early stages of the growth cycle. As per the analysts, increased penetration, increase in price and focus on the high potential client segments will drive the growth further. The zero debt on the balance sheet is another reason to be positive on the company.
