Why Nutrisystem Q4 Earnings Were Not Enough

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When Nutrisystem Inc. (NASDAQ: NTRI) reported its fourth-quarter financial results after the markets closed on Monday, the company said that it had $0.42 in earnings per share (EPS) on $131.2 million in revenue. That compares with consensus estimates that called for $0.41 in EPS and revenue of $129.1 million. The same period of last year reportedly had EPS of $0.29 and $108.9 million in revenue.

During this quarter, the double-digit revenue growth from both new and reactivation customers was driven by a highly effective advertising campaign, media expansion and increased engagement throughout the customer journey.

At the same time, the company also proved out its multibrand strategy, demonstrating that it has a scalable platform to which it can continue to add brands as the right opportunities present themselves.

Looking ahead to the first quarter, the company expects to see EPS in the range of $0.03 to $0.08 and revenues between $204 million and $209 million. However, the consensus estimates for the quarter are $0.28 in EPS on $240.77 million in revenue.

On the books, Nutrisystem cash, cash equivalents and marketable securities totaled $72.2 million at the end of the quarter, up from $33.5 million at the end of the previous year.

Dawn Zier, president and CEO, commented:

As we enter 2018, I am pleased with the extraordinary growth of the South Beach Diet, and we believe it’s just getting started. Our Nutrisystem brand had a slower than expected start to Diet Season as our campaign failed to generate more new customers versus last year. Our highly successful creative approach fatigued and we are in the process of revamping the advertising and rebalancing media as a result. We view this as a temporary and fixable setback and anticipate returning to meaningful growth in 2019. All other key metrics around the business are sound and continuing to grow.

Shares of Nutrisystem were last seen down about 25% at $30.00 on Tuesday, with a consensus analyst price target of $73.00 and a 52-week range of $28.50 to $67.95.