Here's How Medifast (MED) Looks Just Ahead of Q3 Earnings

Medifast, Inc. MED is likely to register an increase in the top line when it reports third-quarter 2020 results on Nov 2, after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $246.4 million, indicating an improvement of 29.6% from the prior-year reported figure.

Further, the bottom line is anticipated to improve year over year. The Zacks Consensus Estimate for earnings for the quarter under review has increased 12 cents to $2.49 over the past 30 days. The figure suggests a sharp growth from $1.32 reported in the year-ago quarter.

Notably, the manufacturer and distributor of weight loss, weight management and healthy living products has a trailing four-quarter earnings surprise of 15.8%, on average. In the last reported quarter, this Baltimore, MD-based company’s bottom line surpassed the Zacks Consensus Estimate by 6.5%.

MEDIFAST INC Price, Consensus and EPS Surprise

MEDIFAST INC Price, Consensus and EPS Surprise

MEDIFAST INC price-consensus-eps-surprise-chart | MEDIFAST INC Quote

Factors to Note

Medifast is likely to have gained from consumers’ growing inclination toward health and wellness products and services amid the pandemic. Majority of the company’s revenues are generated from subscription orders, which we believe is likely to have remained stellar owing to the ongoing crisis. On its lastearnings call management highlighted that trends in July were in line with or better than those in the second quarter.

Analysts cited that consistent sturdy demand and engagement among OPTAVIA coaches and clients are likely to have contributed to the top line. OPTAVIA combines scientifically-proven programs, effective products and guidance from its coaches to help consumers lead a healthier lifestyle. To keep pace with the changing scenario, management has significantly altered its programs for the second half of 2020 — including the development of a digital-first approach.

While aforementioned factors raise optimism, impact of increased promotional activity and higher production costs cannot be ignored. Also, any deleverage in SG&A expenses due to higher OPTAVIA commission expense may have weighed on margins.

What the Zacks Model Unveils

Our proven model conclusively predicts an earnings beat for Medifast this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Medifast has a Zacks Rank #3 and an Earnings ESP of +1.54%.

Other Stocks With a Favorable Combination

Here are some other companies that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:

General Mills GIS has an Earnings ESP of +3.59% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Darling Ingredients DAR has an Earnings ESP of +2.82% and a Zacks Rank #3.

Freshpet FRPT has an Earnings ESP of +16.43% and a Zacks Rank #3.

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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.

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