Medifast, Inc. MED is expected to report a decline in both top and bottom-line metrics for the fourth quarter of 2023 on Feb 20. According to the Zacks Consensus Estimate, revenues are projected to be close to $174 million, marking a decrease of 48.4% from the previous year’s quarter.
The consensus estimate for quarterly earnings stands at 99 cents per share, signifying a decrease of 73.2% from the corresponding quarter in the previous year. Over the last four quarters, MED has an average earnings surprise of 80.7%.
Factors Affecting Performance
Medifast has been facing challenges in attracting customers due to various macroeconomic factors such as economic volatility, inflation, changes in social media algorithms, and intense competition. In the third quarter of 2023, net revenues of $235.9 million declined by 39.6% year over year.
While Medifast’s efforts to expand its product offerings, including medical weight loss programs, and diversify its customer base are expected to support customer acquisition, the management anticipates that these initiatives will not yield substantial results until 2024, posing concerns for the current quarter.
Revenue and Strategic Initiatives
MED projects revenues in the range of $1,050-$1,070 million for 2023, compared to the $1,598.6 million reported in 2022. Additionally, the company expects fourth-quarter 2023 revenues to be within $170-$190 million, indicating a decline from the $337.2 million reported in the corresponding quarter of 2022.
Despite the anticipated decline in revenues, Medifast’s strategic initiatives, including product and program innovation, expansion into diverse market segments and geographies, and optimization of operational efficiency, have been yielding positive results. The recently introduced ‘Fuel for the Future’ program is anticipated to have a positive impact on the company’s performance, aimed at optimizing expenditures across the business.
Assessment by Zacks Model
According to the Zacks model, there is no definitive prediction of an earnings beat for Medifast this time. The combination of a positive Earnings ESP and a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) typically augurs well for an earnings beat, which is not the case for MED this time.
Medifast has an Earnings ESP of 0.00% and is currently ranked at #4 (Sell).
Stocks with the Favorable Combination
Here are three companies worth considering as they exhibit the correct combination to potentially beat earnings:
The Gap, Inc. GPS currently has an Earnings ESP of +24.44% and holds a Zacks Rank of 1. GPS is expected to report an increase in earnings for the fourth quarter of fiscal 2023.
Inter Parfums IPAR currently has an Earnings ESP of +5.71% and a Zacks Rank of 2. The company is expected to report a rise in revenues for the fourth quarter of 2023.
Costco Wholesale COST has an Earnings ESP of +1.36% and a Zacks Rank of 3. COST is expected to post a decline in both top and bottom-line metrics for the second quarter of fiscal 2024.
Stay informed about upcoming earnings announcements with the Zacks Earnings Calendar.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
