May 23, 2024
Top 10 Stock Medifast Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Medifast – Top 10 Stock in Dividend Champions United States
Medifast is listed as a top 10 stock on May 23, 2024 in the market index Dividends USA because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is safely financed, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 59 (high 59% performer), Obermatt assesses an overall buy recommendation for Medifast on May 23, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Personal Products |
| Index | Dividends USA |
| Size class | Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Medifast Buy
| 360 METRICS | May 23, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 48 |
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| GROWTH | ||||||||
| GROWTH | 15 |
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| SAFETY | ||||||||
| SAFETY | 100 |
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| SENTIMENT | ||||||||
| SENTIMENT | 6 |
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| 360° VIEW | ||||||||
| 360° VIEW | 59 |
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ANALYSIS: With an Obermatt 360° View of 59 (better than 59% compared with alternatives), overall professional sentiment and financial characteristics for the stock Medifast are above average. The 360° View is based on consolidating four consolidated indicators, with three out of four metrics below average for Medifast. The only rank that is above average is the consolidated Safety Rank at 100, which means that the company has a financing structure that is safer than those of 100% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the Value, Growth and Sentiment Ranks are all below average. The consolidated Value Rank has a less desirable rank of 48, which means that the share price of Medifast is on the high side compared with typical size in indicators such as revenues, profits, and invested capital. The consolidated Growth Rank also has a low rank of 15, which implies that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. Finally, the consolidated Sentiment Rank is also low at a rank of 6, which means that professional investors are more pessimistic about the stock than for 94% of alternative investment opportunities. While Safety is strong, it’s not the most critical indicator, so we suggest proceeding with caution if you are considering this stock. ...read more
RECOMMENDATION: With a consolidated 360° View of 59, Medifast is better positioned than 59% of all alternative stock investment opportunities based on the Obermatt Method. As only the financing structure, namely the Safety Rank, is on the safer side and all other consolidated Obermatt Ranks are below-average, this is a riskier stock investment proposition. This is especially the case, since professional investor sentiment, the consolidated Obermatt Sentiment Rank, is also low at 6. The negative market view on Medifast may be the high stock price (low value) or the low level of growth. This is a problem. As the Safety Rank is the least significant of the four consolidated Obermatt Ranks, we cannot identify enough positive facts that are visible today to make a case for this stock investment. The company may have a strong future which would justify the high stock price, but this is not visible from investor behavior today. As market sentiment is critical, you should be careful with paying more than market-average for this stock, and conduct further research into the company's future growth potential. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for Medifast negative
ANALYSIS: With an Obermatt Sentiment Rank of 6 (better than 6% compared with alternatives), overall professional sentiment and engagement for the stock Medifast is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Medifast. Analyst Opinions are at a rank of 22 (worse than 78% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 1 which means that stock research experts are getting even more pessimistic. It doesn't end with the analysts. Market Pulse is also low with a rank of 26, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 74% of competitors). No wonder, the Professional Investors rank is only 20, which means that professional investors hold less stock in this company than in 80% of alternative investment opportunities. Pros tend to stay away from Medifast, which may be due to a small company size but just as likely because of its relatively low Sentiment Rank. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 6 (less encouraging than 94% compared with investment alternatives), Medifast has a reputation among professional investors that is far below that of its competitors. Investors should be careful with this stock right now. Further research is required if an investment is desired, because the facts found in the professional community are all negative. ...read more
Value Strategy: Medifast Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 48 (worse than 52% compared with alternatives), Medifast shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half above average for Medifast. Price-to-Sales (P/S) is 80, which means that the stock price compared with what market professionals expect for future sales is lower than for 80% of comparable companies, indicating a good value concerning Medifast's revenue size. The same is valid for the Price-to-Book Capital ratio (also referred to as market-to-book ratio), which is more favorable than for 74% of alternatives (26% of peers have a higher ratio). But expected dividend yields with a Dividend Yield rank of 1 are lower than average (dividends are expected to be lower than 99% of other stocks) while the Price to Profit ratio (or Price to Earnings (P/E) ratio) is higher than average with a Price-to-Profit Rank of 36, making the stock more expensive compared with the company's expected profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 48, is a hold recommendation based on Medifast's stock price compared with the company's operational size and dividend yields. Low profits and low dividends as seen here for Medifast may indicate a restructuring phase. This could be transitory, making the company a good value when profits recover and dividends return to higher levels. If the stock price is compared with the size indicators for revenue and invested capital, it is on the lower side, making this stock a good value investment (apart from current profit and dividend expectations). ...read more
Growth Strategy: Medifast Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 15 (better than 15% compared with alternatives), Medifast shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for Medifast. Only Capital Growth has a good rank of 87, which means that currently professionals expect the company to grow its invested capital more than 1% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 26 which means that currently professionals expect the company to grow less than 74% of its competitors. Profit Growth with a rank of 1 and Stock Returns with a rank of 5 are also low (below 95% of alternative investments). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 15, is a sell recommendation for growth and momentum investors. The good news from the invested capital side is surprising. A company with disappointing revenues, profits, and disappointed shareholders typically doesn't invest above average. Overall, the growth momentum for Medifast is thus negative. As it is intriguing to see that company executives are optimistic about their investment policy, it is worthwhile looking into the details of the capital investment projects. They may indicate future growth and profits and thus if accompanied by a good value, a sign of good timing to invest in the stock. ...read more
Safety Strategy: Medifast Debt Financing Safety very solid
| SAFETY METRICS | May 23, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 100 |
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| REFINANCING | ||||||||
| REFINANCING | 91 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 96 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 100 |
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ANALYSIS: With an Obermatt Safety Rank of 100 (better than 100% compared with alternatives) for 2024, the company Medifast has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Medifast is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for Medifast. Leverage is at 100, meaning the company has a below-average debt-to-equity ratio. It has less debt than 100% of its competitors. Refinancing is at a rank of 91, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 91% of its competitors. Finally, Liquidity is also good at a rank of 96, which means that the company generates more profit to service its debt than 96% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 100 (better than 100% compared with alternatives), Medifast has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: Medifast Above-Average Financial Performance
| COMBINED PERFORMANCE | May 23, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 48 |
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| GROWTH | ||||||||
| GROWTH | 15 |
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| SAFETY | ||||||||
| SAFETY | 96 |
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| COMBINED | ||||||||
| COMBINED | 72 |
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ANALYSIS: With an Obermatt Combined Rank of 72 (better than 72% compared with investment alternatives), Medifast (Personal Products, USA) shares have above-average financial characteristics compared with similar stocks. Shares of Medifast are low in value (priced high) with a consolidated Value Rank of 48 (worse than 52% of alternatives) and show below-average growth (Growth Rank of 15) but are safely financed (Safety Rank of 100), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 72, is a buy recommendation based on Medifast's financial characteristics. As the company Medifast's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 48) and low growth (Obermatt Growth Rank of 15), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 100) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
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