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When Medifast Inc’s (NYSE:MED) announced its latest earnings (31 December 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Medifast’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not MED actually performed well. Below is a quick commentary on how I see MED has performed. See our latest analysis for Medifast
How Well Did MED Perform?
I prefer to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique allows me to assess many different companies in a uniform manner using the latest information. For Medifast, its latest trailing-twelve-month earnings is US$27.72M, which compared to the prior year’s figure, has risen by a substantial 55.43%. Given that these figures are fairly myopic, I’ve estimated an annualized five-year figure for Medifast’s earnings, which stands at US$20.62M This means on average, Medifast has been able to increasingly improve its net income over the past few years as well.
What’s enabled this growth? Let’s take a look at if it is only a result of an industry uplift, or if Medifast has experienced some company-specific growth. Over the last few years, Medifast increased bottom-line, while its top-line fell, by efficiently controlling its costs. This has caused to a margin expansion and profitability over time. Inspecting growth from a sector-level, the US personal products industry has been growing its average earnings by double-digit 16.02% over the past twelve months, and 10.20% over the past five. This shows that any tailwind the industry is benefiting from, Medifast is able to leverage this to its advantage.
What does this mean?
Medifast’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Medifast has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Medifast to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for MED’s future growth? Take a look at our free research report of analyst consensus for MED’s outlook.
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Financial Health: Is MED’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
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Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.