Change has come to the weight loss industry, and this company is leading the way with 30% revenue gains in the past quarter. Here’s a recent article that discusses the changes underway in the industry:
NutriSystem Inc. (NTRI)
From Pivotal Point Trader
NutriSystem Inc. (NTRI) is our latest addition to the Pivotal Point Stock Portfolio.
The Pennsylvania weight-loss company became best known for its sunny ads featuring Marie Osmond. However, its corporate transformation is even more stunning. Against all odds, NutriSystem became a healthy-choices company. Now the business and its share price are entering a pivotal point of inflection. My work suggests the next explosive leg higher is near.
Only five years ago, pundits declared the weight-loss industry dead. The word “diet” was often preceded by “yo-yo” or “hopeless”. If Oprah Winfrey could not stay thin, what hope did regular people have. Americans lost faith.
NutriSystem was reborn in the dark days of 2013. With the share price floundering below $10, it changed focus. NTRI became a health company. It did away with artificial flavors, colors and sweeteners. It stressed healthy choices and healthy lifestyles.
The story resonated.
Since 2013, the company has been the industry’s best performer. It continues to press its advantage as a healthy-lifestyle brand. From smiling Marie to Dan Marino, the ex-NFL quarterback, the emphasis has been about getting stronger and feeling better about yourself. And with the acquisition of South Beach Diet, the company is pushing even further. Its portfolio of low-sugar, low-carb and high-protein meals is perfectly in sync with current trends.
The menu also fits well with where NutriSystem wants to go. The goal: Sell products to people across all demographics and of every shape and size.
NutriSystem has had 15 consecutive quarters of year-over-year growth. The most explosive have come since the SBD acquisition last year. During the first quarter, NTRI reported revenues increased 31% to $212.7 million as compared to $162.1 last year. Gross margins surged 230 basis points. All of its business segments improved, including NutriSystem 13, Uniquely Yours, SBD, shakes, and grocery.
Earnings-per-share ballooned 94% sequentially and 178% year-over-year. In April, Mike Monahan, the company CFO, raised guidance for the second quarter to the range of 58 cents to 63 cents. NutriSystem earned only 25 cents in the first quarter.
And that is not even the best part.
The current “body positivity movement” is only getting started. Already, the definition of healthy has changed drastically. Today, this movement emphasizes self-care over starving and being strong over being skinny. It’s a remedy that combines regular exercise and better nutrition.
That is Nutrisystem’s wheelhouse.
It has the right product portfolio. It has the right messaging. And its financial results prove it’s smashing it out of the park. The stock is ahead 70% year-to-date, and 438% over the last five years. Still, the company is growing fast, and its market capitalization remains less than $2 billion.
For perspective, slower growing Weight Watchers International Inc. (WTW) and Chipotle Mexican Grill Inc. (CMG) have market caps of $2.4 billion and $9.6 billion respectively.
The time to own NutriSystem is now.
Jon Markman, Pivotal Point Trader, www.moneyandmarkets.com, issues@e.moneyandmarkets.com, 1-800-291-8545, July 26, 2017