Nutrisystem Possibly Signaling a Turnaround
The company has a well-known brand across several markets. They provide monthly food packages of shelf-stable and frozen foods consisting of 28 days of meals. NTRI also offers nutritionally balanced weight loss programs in addition to food and counseling.
The current spokesmen are Janet Jackson and Terry Bradshaw who appear in television commercials. The stock has fallen out of favor since it hit a high of $70 about five years ago. Shares now trade for $7.86.
The company has been on a cost-cutting mission over the last 18 months and overhead costs were cut by 25%.
The company has a lot of operational leverage. For example, based on 2012 numbers, just a 5% increase in call volume and unique website visitors could have driven over $6.5 million in additional EBITDA or a near 0.1% increase in web conversion could have yielded over $4 million in additional EBITDA.
Recently, the company revised its earnings estimates and now they expect full-year earnings per share before one-time charges to be in the range of $0.15 to $0.20 per share.
In addition, NTRI are evaluating a range of decisions that could reduce earnings per share by $0.05 to $0.15 for both the fourth quarter and the full year. Revenues are expected to be flat to slightly down for the 12-month period.
Ninety percent of the stock is held by institutions that have demanded that more cash is returned to shareholders. Subsequently, management is paying out 40 percent of their cash flow in dividends. The dividend yield is a monstrous 9.1% at current levels.