NutriSystem Very Acceptable Earnings, Kept at Bay by CEO Departure (NTRI)

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After today’s close we saw earnings out of NutriSystem Inc. (NASDAQ: NTRI) with $0.42 EPS on $216.468 million in revenues.  The estimates from First Call were $0.41 EPS on $214.52 million in revenues. 

The company gave guidance of $180 to $190 million for the quarter ahead, with adjusted EBITDA of $36 to $40 million. Next quarter estimates are $0.60 EPS on $183.29 million in revenues.  As far as fiscal-2008 guidance, the company put revenues at $700 to $720 million, with adjusted EBITDA of $125 to $135 million.  Estimates for fiscal Dec-2008 are $2.23 EPS on $718.89 million in revenues.

Joseph Redling, President & COO, will succeed Michael J. Hagan as Chief Executive Officer, effective May 1, 2008; Hagan will stay on as non-executive Chairman. 

The company also repurchased and retired 3.3 million shares, or approximately 10% of total outstanding shares for $44,557,000. NutriSystem also declared the its first quarterly dividend of $0.175 per share, payable May 15, 2008 to shareholders of record as of May 5, 2008; although this will be subject to determination each quarter ahead.

Shares closed up 3.2% at $21.13 in normal trading today, and shares are down modestly at $21.00 in after-hours trading.  This CEO departure is keeping shares from running most likely. 

We recently ran a large list of stocks that could double from their lows by the end of the recession, and NutriSystem was one of those stocks.  This stock has one of the more crowded short sale trades out there with19.23 million shares (60% of float) listed as being short. After a near 70% drop so far over the last 52-weeks, these numbers would otherwise be very acceptable.

Jon C. Ogg
April 23, 2008