12-12-2023 4:50am

Local Company Looks

Here's How Much You'd Have If You Invested $1000 in Medifast a Decade Ago

For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.

FOMO, or the fear of missing out, also plays a role in investing, particularly with tech giants and popular consumer-facing stocks.

What if you'd invested in Medifast (MED) ten years ago? It may not have been easy to hold on to MED for all that time, but if you did, how much would your investment be worth today?

Medifast's Business In-Depth

With that in mind, let's take a look at Medifast's main business drivers.

With more than 40 years of experience in the health and wellness space, Medifast, Inc. has become a remarkable direct-selling company in the industry. The company is also known for its leading health and wellness community — OPTAVIA — which provides Lifelong Transformation, One Healthy Habit at a Time lifestyle solutions. Given consumers’ rising inclination toward health, the OPTAVIA lifestyle solution and coaching support system bode well.

Incorporated in 1989, Medifast is a leading manufacturer and distributor of clinically-proven healthy living products and programs. The company produces, distributes and sells weight loss, weight management and healthy living products throughits direct online channels as well as franchise weight control centers.

The Baltimore, MD— based company boasts of a diversified portfolio of more than 170 consumable product options, which include bars, bites, pretzels, puffs, cereal crunch, drinks, hearty choices, oatmeal, pancakes, pudding, soft serve, shakes, smoothies, soft bakes and soups.

Medifast’s manufacturing plant, which is approved by the United States Food and Drug Administration, is situated in Owings Mills, MD. The company sells different types of products, which are formed on the basis of its proprietary formulas across the United States and the Asia-Pacific.The products are sold under brands such as the Medifast, OPTAVIA, Thrive by Medifast, Optimal Health by Take Shape for Life and Flavors of Home.

OPTAVIA product line is sold through its community of independent coaches who offer support and guidance to their clients. In partnership with OPTAVIA coaches, franchise partners, resellers and its Scientific Advisory Board, Medifast offers comprehensive wellness products and programs that focus on creating sustainable change by helping people learn to incorporate healthy habits into their lives.

Medifast’s annual sales grew, 4.8% in 2022, 63% in 2021, 31% in 2020 and 42% in 2019 on a year-over-year basis.

Bottom Line

Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in Medifast ten years ago, you're likely feeling pretty good about your investment today.

A $1000 investment made in December 2013 would be worth $2,719.40, or a gain of 171.94%, as of December 7, 2023, according to our calculations. This return excludes dividends but includes price appreciation.

Compare this to the S&P 500's rally of 152.03% and gold's return of 58.45% over the same time frame.

Looking ahead, analysts are expecting more upside for MED.

Medifast is focused on sustainable growth by emphasizing innovation, market diversification, and operational efficiency. The company proactively invests in technology, which supports OPTAVIA Coaches in client interactions. The company’s “Fuel for the Future” plan is another upside, which is helping generate savings. However, Medifast is battling challenges in customer acquisition due to economic changes, social media dynamics, and competition. These aspects hurt third-quarter 2023 results, wherein earnings and revenues fell year over year. Efforts to expand product offerings and include medical weight loss in its programs are likely to aid customer acquisition trends. Medifast does not expect meaningful results until 2024. Shares of the company have underperformed the industry in the past three months, reflecting these concerns.

The stock is up 9.53% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 2 higher, for fiscal 2023. The consensus estimate has moved up as well.