The upcoming earnings will be an important trigger for the stock. Analysts are estimating the company to report a revenue of around $101 million and EPS of 51 cents. For the full fiscal 2013, the revenues are expected to be $386 million and EPS is projected to be around $1.80. The company has surprised the street in the past, and hopefully, there will be some positive surprises in the earnings. A good set of numbers will help the stock to regain lost momentum. It has lost a bit of ground after a good rise recently. On the other hand, negative surprises will increase the weakness, and the correction may run deeper. The revenue growth has been very good over the years, and it is important that trend continues. The bottomline performance has not been that consistent. In Q1'13, there was modest growth in the revenues, and the net income jumped significantly by 49%. The recent correction has made the valuations better, and the stock is now trading around 21 times ttm earnings. The forward P/E of 12 indicates expectations of good growth in EPS over the next few quarters. The balance sheet is strong with very low debt (below $1 million) and around $69 million in cash (as on March 31). The net margins are a bit low at 5%, and that will be an important metric to watch in the earnings. The market for weight management is going to increase with time, and established players like Medifast are going to be benefited. The competition is also tough as there are numerous approaches to tackling obesity. Competitions comes from different segments, and big and small companies like Weight Watchers (WTW), NutriSystems (NTRI) and Herbalife (HLF) are getting aggressive. Chromadex Corporation (CDXC) has introduced a new vitamin derivative (NR) for obesity and diabetes management. Hopefully, Medifast will deliver a great set of numbers so that the stock resumes the uptrend.
