NutriSystem Beats Street With 70% Rise in Q1 Profits

Includes: HLF, NTRI
by: Judy Weil

NutriSystem's revenues soared 62% to $238 million in Q1'07 vs. $146m in Q1'06. Net income rose 70% to $38m, or $1.04/share in Q1'07, vs. $22m or $0.60/share in Q1'06, handily beating analyst's expectations of $0.91 on $213m in sales. Operating income almost doubled from $35m in Q1'06 to $60m in Q1'07. Despite a 92% rise in marketing costs, revenue per customer grew and returning customers should bring in $93m in 2007 compared to $38m in 2006. NutriSystem grew its online market and its men's market grew faster than the traditional woman's market. Cash flow increased-- NutriSystem used $66m of cash for part of $76m in share repurchases. Q1's traditional strength comes from New Year's weight loss NutriSystem 26 04 2007 Chartresolutions, and rival Herbalife also raised guidance to $0.60-$0.61 vs. a Street expectation of $0.56. NutriSystem forecasts Q2 EPS at $0.82-$0.86/share on revenues of $190-$200m, a 43% increase. Full year revenues are expected between $790-$805m, or EPS of $3.34-$3.46/share as NutriSystem continues to focus on the men, women and senior markets, returning customers and new products. Shares rose $7.41 to $65.65 after hours Wednesday.

Sources: Press Release, Reuters, The Street I & II, Forbes, 24/7 Wall St.
Commentary: NutriSystem's Strong Top Line Growth To ContinueExpecting Buy Interest in NutriSystem Folowing Bullish CIBC CallDoes NutriSystem Game the Market?NutriSystem: Capitalize On America's Obesity Problem
Stocks/ETFs to watch: NutriSystem (NASDAQ:NTRI), Herbalife (NYSE:HLF)

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