Following NutriSystem Inc. (NASDAQ: NTRI)'s first-quarter results, Wunderlich said it believes part of the current premium valuation is attributed to expectations South Beach can develop into a sizeable revenue platform.
Nutrisystem acquired South Beach Diet from SBD Holdings for $15 million in December 2015. South Beach Diet, created by Arthur Agatston, M.D., a cardiologist from southern Florida, is meant to help overweight patients improve their health by prescribing a safe diet for them.
Agatston's book "The South Beach Diet" became a runaway bestseller, boasting more than 23 million copies in print.
Nutrisystem revealed plans for South Beach Diet in December 2016, announcing its debut as a structured meal delivery weight-loss program.
"This past September we began our beta test of the South Beach Diet and we saw strong consumer interest in the brand and our overall opportunity to capitalize on the strong brand equity of the program," said Dawn Zier, president and CEO of Nutrisystem in December 2016.
"We will begin rolling out the all new South Beach Diet in January and it will ramp up over time, enabling us to capture a larger portion of the $10–15 billion addressable weight loss market."
Analyst Mitchell Pinheiro said he remains positive on South Beach's outlook but believes the stock price reflects the visible potential, particularly in light of its nascent stage.
In the first quarter, South Beach Diet added revenues of $8 million, $1 million above the analyst's estimate. The company also reiterated its 2017 guidance of $20 million to $25 million in revenues from this diet.
"While the program continues to be tweaked, we believe the performance was solid and expect further improvements in the product mix and marketing message as the year progresses, with an eye toward more meaningful growth in 2018," the analyst explained.
Wunderlich noted the company reported first-quarter earnings per share of $0.25, exceeding its estimate of $0.10, with lower tax rate adding $0.02 relative to its estimate. Revenues rose 31 percent to $197 million, above the firm's estimate of $197 million.
The firm commended the new customer revenue, which spiked 35 percent, aided by strong new customer growth and reactivation revenue.
Wunderlich raised its 2017 earnings per share estimate to $1.66 from $1.56, which is at the low end of the guidance range of $1.65–$1.75. The company attributed the revision to the better than expected first-quarter results. The revenue estimate is $656 million, also reflecting the first quarter strength.
"Given the momentum of 1Q, we believe this could prove conservative and represents potential upside to our estimate," the firm said.
The firm also raised its 2018 earnings per share estimate to $1.91 from $1.80 on revenues of $706 million, up 7 percent.
Additionally, the firm said its second-quarter estimate calls for 20 percent revenue growth.
"We project core Nutrisystem revenue growth of 6 percent, which we believe is conservative given the current momentum. We have left our South Beach revenue estimate unchanged at $57mm implying a growth rate of 49 percent," the firm added.
Wunderlich downgraded shares of the company to Hold from Buy but raised its price target to $60 from $52.
The downgrade was due to the firm's expectations that there aren't any sufficient near-term catalysts to drive the valuation multiple higher, with the firm seeing a more even risk/reward scenario over the next six months. That said, the firm remains positive on NutriSystem's fundamental outlook against a backdrop of consistently strong operating performance.
Ally Financial isn't alone in its outlook, as major banks are becoming hesitant in issuing new subprime loans suing money from their balance sheets. According to a Bloomberg report, Wells Fargo & Co (NYSE: WFC) lowered the number of loans it made to subprime car buyers during the first quarter by 29 percent.
Wells Fargo's decision wasn't a result of a damage to its reputation for its account opening scandal, rather it was a calculated move to tighten its standards. The bank also joins JPMorgan Chase & Co. (NYSE: JPM) whose consumer and community banking head Gordon Smith said earlier this year it is looking to "dramatically" lower its own subprime auto lending activity.
How is that banks are shying away from their subprime auto lending activity but at the same time supporting it in the face of concerning data.
Bloomberg noted major banks are indirectly funding billions of dollars' worth of subprime auto loans by helping companies such as Santander Consumer USA Holdings Inc (NYSE: SC) borrow cash in the asset-backed securities market.
There may be some logic behind the seemingly confusing double-standard. Specifically, money managers including hedge funds tend to have a higher risk tolerance for riskier assets such as an auto subprime loan.
Apple Inc. (NASDAQ: AAPL) and Samsung Electronic (OTC: SSNLF)'s famed rivalry in the smartphone arena continues. Though the former appeals to its audience with its feature-rich phones, which are aesthetically designed and are easy to use, the latter has strived all through to match its rival in every step.
Samsung's forte is its cost appeal, as it creates several models, each catering to different demographics of society. In 2016 alone, Samsung rolled out 31 models of smartphones from its stable compared to Apple's three.
Despite its flagship Galaxy Note 7 fiasco, which transitorily generated negative sentiment, Samsung still sold 311.4 million smartphone units of in 2016 compared to Apple's 215.4 million, giving Samsung a market share of 21.2 percent. Who knows what, if not for the Note 7 debacle, Samsung's numbers would have been?
Benzinga looked at how Apple would have fared in terms of valuation if it had sold as many units of smartphones as Samsung did in 2016.
The analysis was done based on the following assumptions:
Assuming Apple sold 311.4 million units (Samsung's 2016 smartphone shipments) of iPhones instead of the 215.4 million it actually sold and applying an average selling price of $695 (the most recent quarterly statistics), the company would have generated annual revenues of $216.42 billion from the iPhone alone, roughly 44 percent more than it actually made.
Apple's calendar year 2016 revenues using Samsung's smartphone units would have been $295.19 billion.
Applying a price to sales ratio of 3.46, valuation would have been $1,021.36 as opposed to $753.72 billion currently.
Under this hypothetical scenario, Apple would trade at $194.55 compared to its current market price of $144, suggesting 35 percent upside from current levels.
Is Apple's think tank listening? A moot point, however, would be if Apple begins to focus on volume, and whether it can it do so without hurting margins and product quality.
With the economy faring relatively well amid resurgence in consumer confidence and in turn spending, the milieu is relatively favorable for auto and auto-related stocks. Added to the positive macroeconomic backdrop, automakers have been very lavish in splurging incentives to lure customers.
Estimates by Edmunds show that auto sales rose to a record of 17.5 million in 2016, a 0.3 percent increase from 2015. December saw record sales of 1.68 million units.
That said, analysts expect a slight loss of momentum this year. Edmunds predicts new vehicle sales of 17.2 million units in 2017, which would mean that the industry is set to break the seven-year growth streak.
This has been confirmed by monthly sales numbers of the first three months of the year. Data released in early April showed most auto markets reported sales declines for March amid an inventory glut and rising incentives.
Against this backdrop, Benzinga looked at how much of returns an investor would have pocketed by staying invested in three categories of stocks namely:
An investment horizon of two years was taken into consideration for comparison purpose.
The average returns of automakers over a two-year horizon is a negative 13.2 percent and that of auto component suppliers is a negative 8.3 percent. On the other hand, auto parts retailers/service providers netted returns of a positive 3.7 percent in the same period.
However, the showing of auto parts retailers/service providers pales in comparison before the S&P 500 Index, which was up 13.44 percent in the same period.
Historian Allan J. Lichtman took serious heat from the Left for predicting Donald Trump would win the presidency. Now, he’s hearing it from the Right because he’s predicting Trump is hurtling toward impeachment.
He counts the many ways in his latest book, “The Case For Impeachment,” (HarperCollins Publishers LLC), which came out in April as Trump closed in on his first 100 days in office, which officially end Saturday.
More crucial, Lichtman said, are the next 100 days. After failing to get legislative traction on core campaign pledges, Trump needs to make gains before myriad investigations into his Russian ties, treatment of women, conflicts of interest and other issues coalesce to kill his presidency.
“I think the next 100 days are more critical than the first 100 days,” said Lichtman, history professor at American University.
The litany of setbacks:
“He campaigned as a dealmaker and has not gotten anything done,” Lichtman said, with the notable exception of getting Neil Gorsuch appointed to the U.S. Supreme Court.
Meanwhile, the next 100 days are bringing what could be a series of fresh obstacles that could coalesce into a juggernaut, including:
“Pence figures into this significantly,” he said. “If Trump becomes a liability, they could turn against him.”
Lichtman is the author of 10 books. Using a predictive model and ignoring polls and pundits, he’s called the winner of every presidential election since 1984.
Lichtman said Trump’s maverick style is reminiscent of that of former President Andrew Johnson, who served from 1865 to 1869 after the assassination of Abraham Lincoln. Johnson was the first American president impeached by the House; his conviction by the Senate fell one vote short.
But Trump hews even closer to former President Richard Nixon, who resigned in 1974 because of abuse of power and cover-up allegations stemming from the Watergate scandal. Though Trump has no experience in public service and Nixon was the quintessential political lifer, Lichtman said the two men share some telling personality traits.
“Both men lack core guiding principles. They see themselves as beset by enemies and beset by the press,” he said. “Neither man has respect for American traditions. And both have a proclivity to lie.”
Lichtman, often called the predicting professor, writes in his book: “Counting Nixon, one out of every fourteen presidents has faced impeachment. Gamblers have become rich betting on longer odds than that.”
President Donald Trump's proposed 2018 Federal Budget has allocated $2.6 billion for a border wall on the southern border. But is there better use for this money?
According to Statista, the same $2.6 billion could support 131,255 veteran caregivers for one year at a cost of $19,809 per year. This would mark an increase from the current funding, which supports just 36,600 caregivers.
In terms of infrastructure, the cash could resurface over 2,000 miles of four-lane roads at a cost of $1.25 million per mile, although the White House remains determined to propose a $1-trillion infrastructure fund project.
Or, the navy could buy 1,390 Tomahawk missiles at a cost of $1.87 million each, but the president's budget is already considered to be friendly for the military given a massive budget increase.
The city of Chicago is seeing rising murder rates and even caught the attention of Trump in early 2017. For $2.6 billion, the president could divert funds from the wall and fund the entire Chicago Police Department for 21 months at a cost of $124 million per year.
Finally, the wall could also fund 67,358 college degrees at a cost of $38,600 per degree, although there are some options for students to alleviate the financial burden of college.
Here's Statista informative chart showing various options of what else the border wall can finance.
Fellow millennials, are you upset you never received any lessons in financial literacy during your school years?
It is a common frustration among many to feel we were never taught what we really needed to know to prepare us for the outside world.
That might be changing. More and more schools across the country are coming together to combat this issue. W!SE (Working In Support of Education), a national educational nonprofit aimed at creating a national network of participants in its financial literacy certification program, announced the 2016 “100 Best W!se High Schools Teaching Personal Finance” at a ceremony in New York last week sponsored by Voya Financial Inc (NYSE: VOYA).
"W!se is leading the way in personal finance education preparing young people for a life of financial wellness," said Phyllis F. Perillo, founder, president and CEO of w!se. "We are proud to showcase the top 100 schools of distinction and warmly congratulate their dedicated teachers and administrators for outstanding achievement."
Schools from 46 states participated in the event, up from 36 states five years ago. "Financial Literacy is one of the most important issues of our time," said keynote speaker Anthony Scaramucci. "A financially literate nation is key to sustainable economic growth and I applaud w!se for giving young Americans the knowledge and skills to become our first generation of financially savvy adults."
Meanwhile, the investment community has become slightly optimistic on the shares, as reflected by the rally seen since late March, taking the stock to a new 52-week high. The stock was largely range bound between $370 and $450 until mid-April when it moved out of the range.
For the past one-year, the stock is up 6.74 percent.
The recent rally has put the stock in overbought zone, as reflected by the 14-day relative strength indicator rising to 79.60. That said, the sentiment is still positive, given that the shorter-term 50-day moving average (currently at $429.13) continues to remain above the longer-term 200-day moving average (currently at $410.96) since the former broke above the latter in early March.
If the stock doggedly pushes forward, it could face serious resistance around the $511–$533 area, a peak last scaled before the recent consolidation began in April 2016.
Consolidation, according to Investopedia is used to refer to the movement of a stock price within a well-defined pattern of trading levels.
A consolidation phase, a phase in which a stock moves sideways, can last for days or months, or even a year or two. In the case of Chipotle, the trading range was sustained for about a year. It usually represents a narrow trading band, within which there could be short rallies or retreats.
Essentially, the stock is moving to an established low and then rebounds to an established high and then repeats this move, without breaking below the established lows, termed as the support, and above the established highs, termed as the resistance.
Another way of looking at it is that it represents a period when traders are indecisive about the next price move and they stay positioned for the next move.
For confirming a consolidation phase, look for:
Experts view consolidation as healthy. If a stock continues to run up without any consolidation, it may prompt investors to be wary of any dip, resulting in largescale liquidation at the first sign of a pullback. In this case, the percentage by which the stock retreats could be far more than the pullback associated with a consolidation.
To trade a consolidation move with higher profits and less risk, traders need to look at volumes.
Volumes during a consolidation phase are generally low. When a security is approaching the support/resistance level, there is usually a pick-up in volumes. Especially when a security is about to break out, volumes increase more than the normal levels.
Traders can position themselves to buy a stock when it breaks above the resistance levels or sell a stock when it violates its downside support.
Once identify a breakout candidate is identified, confirmation of the breakout needs to be established by looking at volumes. Subsequently, one needs to set a reasonable objective, which can be done by measuring the distance between the support and resistance levels.
However, if the stock retests its previous resistance or support levels, then the breakout can be deemed as having failed. It is advisable that an investor exits by taking a loss.
Going by the volume trend, Chipotle's current breakout may not point to a sustainable upward move. Caution could be the watchword, even as investors go gung ho above the stock hitting its highest level for the year.
At the time of writing, Chipotle Mexican Grill is slipping 1.20 percent to $473.03.
The company is going to report earnings on May 3 and Tigay thinks that it would be a good idea to buy the stock and sell the May 19 expiration, 150 strike call for $3.60. The premium provides him a protection of 2.40 percent in case the stock trades lower. If Facebook closes above $150 at the May 19 expiration, he would have to sell the stock and his selling price would be set at $153.60.
He explained that somebody bought 8,500 contracts of the July 48/50 call spread for $0.22 in the first half of the trading session. The trade breaks even at $48.22 or 7.25 percent above the closing price on Friday. If the stock jumps 11.21 percent or higher, the trade is going to reach its maximal profit of $1.78. Najarian likes the trade and he decided to buy the call spread.