When I last wrote about Medifast (MED) ("Medifast May Be The Best House On A Scary Street"),
I thought that the shares certainly looked cheap, but that the risks of
the weight loss industry and the company's model made it a less
desirable choice. Since then, the shares are up about 13% even with two
quarterly misses on revenue and more weakness than expected from weather
and a challenging consumer retail environment.
As the shares have
risen but the business really has not improved all that much, I find
less value in the stock today. I may well be too bearish on the
company's plans to franchise its Weight Control Centers, but I don't
like the apparent sensitivity of revenue to promotional spending.
Medifast does not seem too expensive on standard valuation metrics, but I
just don't see enough momentum in the business to be all that excited
by the potential.
Follow this link to continue:
Is The Medifast Model Built To Last?
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