NutriSystem, Inc. (NTRI)

TMF1000 (63.33) Submitted: 9/16/06 1:04 AM

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3Q:2006 will be reported 10/25/2006

Estimates
3Q:2006 - $0.51
4Q:2006 - $0.44
Fiscal 2006 $2.08
Fiscal 2007 $2.86

September 15, 2006
Price $59.35

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BlazeTime (99.63) Submitted: 10/13/06 9:41 AM

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The Forbes article yesterday provides a detailed and accurate history of this company. A must read for all potential investors. The bottom line...growth should continue:

www.forbes.com/free_forbes/2006/1030/170.html

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TMF1000 (63.33) Submitted: 4/05/07 10:12 AM

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Nutrisystem (NTRI)
Price: $47.85

Nutrisystem 4Q:2005 earnings $0.17 and $0.59 for the fiscal year. It was reported on February 21, 2006. Trading range between February 21, 2006 and April 24, 2006 was $37.10 and $52.75: PE range was 62.88 and 89.

Nutrisystem 1Q:2006 earnings April 24, 2006 - $0.60 up from $0.10 last year.
Price range between April 24, 2006 and July 24, 2006 was $53.12 and $76.33. TTM earnings were $1.09The first quarter represented the by far the best quarter ever and the stock price went up $17 the day after the release. The PE range 49.64 and 71.33.

July 24, 2006 2nd quarter 2006
http://biz.yahoo.com/bw/060724/20060724005936.html...

Highlights 2Q:2006
** Revenues increased 224% to $132,631,000 in the second quarter 2006 compared to $40,943,000 in revenues in the second quarter of 2005.
** Net income increased 358% to $19,790,000 or $0.53 per share compared to $0.12 last year.
** Direct channel revenues reached $122,481,000 in the second quarter of 2006, a 242% increase over the same period in 2005. The Company added approximately 168,000 Direct channel new customers, a 190% increase from approximately 58,000 new customers in the second quarter 2005.
** Basic share count 36,033,000
** Diluted share count 37,481,000
** Customer acquisition cost $159
** 235,000 new customers
** Cash $97,432,000
** Debt $415,000
** Cash flow for the six months $42,085,000
Nutrisystem 2Q:2006 Earnings $0.53. TTM grew to $1.49. This report was not greeted as favorably as the 1Q:2006 and the stock price dropped some $13.00. The trading range between July 24, 2006 and October 24, 2006 was $45.45 and $72.70. PE range was 30.5 to 48.79..


Guidance issued in the second quarter:
3Q:2006 revenues will be between $135 and $140 million an increase of 100%. Diluted earnings are expected between $0.47 and $0.50 including $0.02 stock compensation expense.
For fiscal 2006, the company expects $525 and $535 million, an increase of at least 147% from 2005. The company believes that they will make between $2.04 and $2.10 diluted earnings per share including an estimated $0.10 stock compensation expense of $0.10.

ThompsonFN estimates made during the second quarter:
Fiscal 2006 $2.08
Fiscal 3Q:06 $0.51
Fiscal 4Q:06 $0.44
Fiscal 2007 $2.86

The $45.48 set in the second quarter represented a forward PE of 21.86. The question is how fast can and how long can NTRI continue to grow? They have successfully introduced men to their meal by mail programs and this could supply some consistent growth to supplement their women's programs.

October 24, 2006 3Q:2006 highlights:
** Revenues $155,258,000 up 141% from $64,518,000 last year
** Net income was $23,398,000 or $0.63 per share compared to $7,195,000 or $0.19 last year.
** TTM $1.93
** Direct channel new customers were up 104% to 115,000 new customers in the quarter.
** Customer acquisition cost was $145
** Diluted share count 37,117,000
** Cash flow for nine months $89,036,000
** Cash $101,717,000
** Debt $178,000
** QVC revenues nearly doubled year over year but it total piece of the NTRI pie dropped from 7.9% to 5.9% due to the huge success of the men's product line and the continued success of the women's product line. Nutrisystem also won the QVC vendor of the year for the 2005 – 2006 period.
** Trading range between October 24, 2006 to February 14, 2006 was $40.82 to $76.20: PE range was 21.15 to 39.48: Special note the stock dropped nearly $8.00 on January 31, 2007 on guidance.


Quarterly notes:
The women's market which is their most mature is still growing. The company said, “continues to deliver impressive numbers.” The new men's segment grew 30% in the third quarter and is their new growth driver. Mr. Hagan said, “The momentum we've already built in the men's market is a clear signal to us that it will be a large business for us in the years to come.”

The Company plans to introduce a variety of new foods for their soon-to-be launched seniors marketing campaign. If this turns out to be as successful as the men's lines, it will be another excellent growth driver.


Company's guidance for the fourth quarter made in the 3Q press release.
** Revenues will be between $123 million and $128 million up 77% from last year.
** Diluted earnings per share are expected to be between $0.45 and $0.48 including ($0.01 stock-based compensation)
They expect 155,000 new direct channel customers in the fourth quarter

For the full year 2006, the Company expects that revenue will be between $558 and $563 million, an increase of at least 163% from 2005. Diluted earnings per share are expected to be between $2.21 and $2.24 including an estimated $0.09 of share-based expense. Source 3rd quarter press release dated October 24, 2006.



The guidance that dropped the stock: Jim Cramer jumped all over this and said awful guidance which was after the drop of $8.00 occurred. Let's look at the so-called awful guidance.
http://biz.yahoo.com/bw/070130/20070130006261.html...

The Company said revenues for the first quarter would be $200 to $210 up only 36%. BooHoo! And the first quarter earnings would be between $0.82 and $0.86 up over 36% from a very strong first quarter last year.
** New customers to be between 290,000 and 310,000

Fourth Quarter and Full Year 2006 guidance:

Fourth quarter revenues expected to be between $131 and $133 million, up 90% year-over-year.
Full year 2006 revenues are expected to be between $566 and $568 million: 4Q customers 159,000 for the Direct business
Fourth quarter new customers expected to be at least 159,000 from Direct channel business - up at least 44% year-over-year. For 2006, the Company expects to report at least 796,000 new customers.
The Company expects the fourth quarter earnings per diluted share to fall between $0.50 and $0.53 and they expect their full year earnings per diluted share to fall between $2.26 and $2.29. This so called 'awful' guidance would give them a PE ratio of 18.80 based on a price of $42.50 and the earnings would be 283% higher than a year ago. I will take this type of awful guidance for each stock I own particularly combined with the fact that the PE ratio will be below the market average. This same pattern was also followed by Usana.

These two stocks have been really good trading vehicles along with being good long-term holds.

One other important point this so called 'awful' guidance represented upward revision made in the 3rd quarter press release in October. I feel Jim Cramer really blew this one.

Jim Cramer argument against Nutrisystem:
http://www.thestreet.com/_yahoo/funds/madmoneywrap...

1. has gotten "crushed" in the last couple of days because it came out with "" guidance, Cramer told viewers. (I will take awful if that means 283% higher than last year) Now if he thinking lower than the third quarter than he has missed the point that NTRI fourth quarter has always been their weakest. The fourth quarter will still be 370% higher than last year.

2. Cramer admits its look cheap – at 18 times fiscal 2006 earnings – I would say so. But he says: "It is done," he said, adding that the market won't get fooled again by the stock. Think of it as a "one-hit wonder," Cramer said. It will go through "a long period of decline."


What he is saying about the market being “fooled”, is the fact that Nutrisystem has moved from $45 to $70 and back down to $45 as it did in the last quarter too. But that is not being fooled in my opinion, it is fooled if you listen to Cramer and fail to grab that potential 55% appreciation in three months. Worse this is logic based on share price, not valuation, not facts about the business.


3. NutriSystem's average customer stays only 10 weeks before leaving, he said. And given the fact that almost no one out there hasn't been exposed to it -- as its ads are everywhere -( I am not sure where he got this information – I was unable to find it. )

4. He prefers weight watcher who he feels has a better distribution system and brand. ( I wont argue that, but Nutrisystems numbers belies that they are weakening. He also accused Nutrisystem of having too much churn.

Argument 3 and 4 is derived from this blog.
http://www.casinocapitalism.com/2006/08/nutrisyste...

Although, some of its logical, there is too many pieces of the puzzle missing. For instance; how many of the reactivated customers have reactivated in the past? These dinners are expensive. Many will only want to buy them occasionally and then buy them again. If they are like me, the winter is the best time to get meals delivered to the home because, who wants to go out in the cold and people get less exercise in the winter which makes them perfect NTRI seasonal customers. Don't laugh we make extensive use of Swan's dinners for that very reason. So, I don't think we can draw the conclusion drawn by the blogger.

I think analysts are making the wrong connection about churn and its relationship to earnings growth. Churn is unimportant if the company is growing by 300% - there is another driving force. There just is not enough information to draw that type of conclusion.

October 24, 2006 3Q:2006 press release
http://yahoo.brand.edgar-online.com/fetchFilingFra...

Nutrisystem has 2 million names that

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huddaman (95.81) Submitted: 2/21/08 8:31 PM

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Before buying the stock, try buying the food. You can return for full refund if you don't like, and I think you won't.

Its hardly convenient. They send you ugly plastic boxed lunch. If someone wants convenience, the healthy choice, smart ones, etc are better option. Their food is pretty bad. And convenience, not really. You have to prepare additional salad, etc.

Jenny Craig is better. I didn't try this, but that's the feedback I got from my better half..

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