NutriSystem (NTRI) is one of those names that investors roll their eyes at and say stuff like, “Wasn’t that a thing, like, 10 years ago?”
Well, if you doubt whether NutriSystem and its products are still relevant, just check out NTRI stock: Shares have soared over 50% so far in 2015, and 18% of that was realized in the days after posting strong earnings.
Specifically, NutriSystem reported 41 cents in earnings to handily top estimates of 37 cents. It also saw revenue rise by 17%.
I anticipated this run in a plug for NTRI stock back in June, and I sure hope you took my advice!
Sure, other fitness and weight-loss options abound, from emerging fads like Herbalife (HLF) to competitors like Medifast (MED), and even legacy brands such as Weight Watchers (WTW).
To be clear, it hasn’t all been great for NutriSystem stock over the last several years. NTRI stock actually melted down even as the bull market was hitting its stride, and its returns since 2011 were in the red through early 2015 while the market nearly doubled.
Much of that underperformance in 2011 was thanks to a possible violation of securities law, resulting in a lot of skepticism over the validity of financial statements. A quick 30% dive in NTRI stock was the result.
When you couple this uncertainty with struggling sales metrics, it’s no wonder NTRI stock proceeded to drop about 60% from the end of 2010 through early 2013. Investors simply didn’t have a lot to believe in.
But the past is the past, and NutriSystem stock has turned things around big-time. Restructuring helped turn losses back into small profits, and a push into retail — including displays in places such as Walmart (WMT) — really juiced results.
It’s added up to a great performance for NTRI stock, including an 85% rally in the last 12 months after strong earnings in the first quarter and this most recent earnings home run.
With 42% earnings growth projected this year and a strong history of earnings surprises, NutriSystem stock could continue to deliver big profits thanks to the fact that expectations are still a bit low, and a successful turnaround is still delivering big results.
It’s not sexy to go with an old-school weight loss company amid the current fitness crazes. There’s something to be said, however, for a battle-tested stock that has gotten its act together instead of chasing the latest fad.
Have confidence in NTRI stock here, especially after NutriSystem’s strong earnings.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.
