Medifast (MED) released stellar fourth quarter results on March 15th with revenue coming in at $10.2 million, a whopping 76% increase when compared to fourth quarter 2005 revenue of $5.8 million. The company earned 4 cents per diluted share and this represents their 25th consecutive profitable quarter. Interestingly they also upped their 2006 forecast by about 20% and now expect 2006 revenue to come in between $58 and $60 million. Some other highlights from the fourth quarter conference call are given below.
* Full year 2005 revenue came in at $40.1 million, a 47% increase over 2004.
* Customer acquisition costs decreased from $150 per customer down to $100 dollar per customer while revenue per customer increased from $525 to $575.
* There will be no additional preferred stock dividend payments in 2006 and all preferred stock has now been converted to common stock.
* Earnings outlook for 2006 raised to a range of 29 cents to 32 cents thanks to better than expected returns from advertising.
* On the negative side, the tax rate is expected to go up to 34% or 35% in 2006 when compared to the current tax rate of 30%. Call center response time was also longer in the first quarter in 2006.
The stock traded up 16.52% on the day following the release of these results. Considering that Medifast earns 30 cents a share in 2006, the forward P/E works out to 27.3 based on the closing price of $8.18 on March 16th. For a company that has such an excellent growth rate it certainly appears to be undervalued.
MED 1-yr Chart
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