Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Nutrisystem: A Cash Machine

|Includes: Nutrisystem Inc (NTRI)

As I was searching for a company that produces decent cash flow I came upon a company I associate with Dan Marino talking about how much weight he loss using their products, Nutrisystem. Curiosity spiked and more research was made on the company.

Nutrisystem sells packaged meals via internet or phone that are designed to make you lose weight and look better. Their main competitors are Weight Watchers, Jenny Craig, Medifast, and eDiets among others.

Balance Sheet Strength:

Nutrisystem has and Medifast both have $0 debt were as Weight Watchers has $2.4 billion in debt. In this case Nutrisystem and Medifast have more flexibility to manage a tough market.

Debt to Equity (2Q2014)

Nutrisystem

0.00

Weight Watchers

N/A

Medifast

0.00

Cash Position:

Nutrisystem has the lowest cash and marketable securities available as compared to Medifast and Weight Watchers. Even though this does not provide as much safety as its competitors, it is sufficient cash to pay for one full quarter operating expenses.

06/30/2014

Nutrisystem

Weight Watchers

Medifast

Cash

23

277

32

Marketable Securities

16

0

37

Total

39

277

69

Key Metrics:

Per Yahoo Finance, Nutrisystem has the highest P/E, Forward P/E, PEG Ratio, Price to Sales, Price to Book. This make the stock pricey compared to its peers.

Company

Nutrisystem

Weight Watchers

Medifast

Trailing P/E

57.81

7.87

18.00

Forward P/E

20.60

16.25

16.24

PEG Ratio

2.25

-0.49

0.98

Price/Sales

1.19

0.88

1.12

Price/Book

8.64

N/A

3.81

Insider Purchases:

Nutrisystem had inside purchases within the last 12 months were as Weight Watchers and Medifast did not.

Free Cash Flow:

Nutrisystem has the highest Price to FCF compared to its peers making it once again pricey.

12/31/2013

Nutrisystem

Weight Watchers

Medifast

CFO

35

324

42

Capital Ex/Acquisitions

8

62

12

FCF

27

362

30

Price to FCF

17.15

3.87

13.37

Dividend:

Of all the companies mentioned, Nutrisystem is the only one that offers a dividend and it has been issued since 2008. This makes management disciplined to deliver consistent cash flow to cover its dividend.

Why Nutrisystem?

With no debt, consistent dividends, and a lean business model with no brick and mortar stores reminding me of the Blockbuster and inception of Netflix era makes me interested in this company.

Source: Yahoo Finance, Scottrade, Hoovers, Wikinvest

Disclosure: The author is long NTRI.