NutriSystem Earnings Preview

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After beating estimates last quarter by $0.09, NutriSystem (NAS: NTRI) has set the standard for itself. The company will unveil its latest earnings on Monday, Oct. 31. NutriSystem is a provider of a weight management system based on a portion-controlled, prepared meal program.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on NutriSystem with three of five analysts rating it hold. Analysts don't like NutriSystem as much as competitor Weight Watchers International overall. Four out of seven analysts rate Weight Watchers International a buy compared to two of five for NutriSystem.
  • Revenue Forecasts: On average, analysts predict $103.8 million in revenue this quarter. That would represent a decline of 14.3% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.25 per share. Estimates range from $0.23 to $0.27.

What our community says:
CAPS All-Stars are solidly behind the stock with 89.6% assigning it an "outperform" rating. The community at large concurs with the All-Stars with 90.1% awarding it a rating of "outperform." Fools have embraced NutriSystem and haven't been shy with their opinions lately, logging 497 posts in the past 30 days. Despite the majority sentiment in favor of NutriSystem, the stock has a middling CAPS rating of three out of five stars.

Management:
Revenue has fallen for the past three quarters. The company's gross margin shrank by six percentage points in the last quarter. Revenue fell 18% while cost of sales fell 6.7% to $57.6 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters. 

QuarterQ2Q1Q4Q3
Gross Margin50.4%51.9%56.5%56.6%
Operating Margin14.7%(3.9%)13.0%11.5%
Net Margin9.3%(2.6%)8.1%7.6%
For all our NutriSystem-specific analysis, including earnings and beyond, add NutriSystem to My Watchlist.

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