Gorge On Nutrisystem's Yield

The shares of Nutrisystem Inc. (Nasdaq: NTRI) are down about 46% over the past year, and that has me intrigued. I think the current price is a great entry point for long-term investors and I’ll go through my reasoning below by looking briefly at the business itself, and by focusing in on the financial history. I’ll model what I think is a reasonable future price based on the dividend, and I’ll suggest a way to enhance yield even further using covered call options. I’ll conclude with a discussion of the stock itself, as distinct from the business.
The crux of the argument is as follows: Although management is predicting softer revenue growth in 2018, the shares have already reacted to that news (down about 12% last month, down massively over the past twelve months). For that reason, I think all of the bad news is “baked in,” and investors buying today would be buying at a time when the risk of further capital loss is relatively low.
Background Nutrisystem is a provider of weight loss solutions and weight management products and services. The company's program customers purchase monthly food packages, consisting of breakfasts, lunches, dinners and snacks and flex meal plan recipes. Nutrisystem offers more than 150 menu options at different price points and most of the customer's order on an auto-delivery, subscription type basis. The vast majority of sales (92%) are from online or over the telephone, the balance coming from retail... Read more

Older articles featuring NTRI: