Analyzing Medifast (MED) & Simply Good Foods (SMPL)

Simply Good Foods (NASDAQ: SMPL) and Medifast (NYSE:MED) are both small-cap non-cyclical consumer goods & services companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, risk, analyst recommendations and valuation.

Dividends

Medifast pays an annual dividend of $1.92 per share and has a dividend yield of 2.6%. Simply Good Foods does not pay a dividend. Medifast pays out 94.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of current ratings and target prices for Simply Good Foods and Medifast, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Simply Good Foods 0 0 3 0 3.00
Medifast 0 1 1 0 2.50

Simply Good Foods currently has a consensus target price of $15.50, suggesting a potential upside of 9.70%. Medifast has a consensus target price of $72.00, suggesting a potential downside of 1.11%. Given Simply Good Foods’ stronger consensus rating and higher probable upside, equities analysts clearly believe Simply Good Foods is more favorable than Medifast.

Institutional and Insider Ownership

69.5% of Simply Good Foods shares are held by institutional investors. Comparatively, 86.8% of Medifast shares are held by institutional investors. 1.2% of Simply Good Foods shares are held by company insiders. Comparatively, 5.4% of Medifast shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Simply Good Foods and Medifast’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Simply Good Foods $396.17 million 2.52 -$2.03 million $0.02 706.50
Medifast $274.53 million 3.16 $17.83 million $2.04 35.69

Medifast has lower revenue, but higher earnings than Simply Good Foods. Medifast is trading at a lower price-to-earnings ratio than Simply Good Foods, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Simply Good Foods and Medifast’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Simply Good Foods N/A N/A N/A
Medifast 8.58% 24.07% 19.31%

Summary

Medifast beats Simply Good Foods on 9 of the 15 factors compared between the two stocks.

Simply Good Foods Company Profile

The Simply Good Foods Company is a holding company. The Company through its subsidiaries, is engaged in developing, marketing and selling of branded nutritional foods and snacking products. The Company offers a range of products such as nutrition bars, ready to drink (RTD) shakes, snacks and confectionery products. These all products marketed under the Atkins, SimplyProtein, Atkins Harvest Trail, Atkins Endulge, and Atkins Lift brand names. The Company offers three main types of nutrition bars including Atkins Harvest Trail Bars, Atkins Meal Bars And Atkins Snack Bars.The Company’s Atkins harvest trail bars contain eight grams of protein and 9 to 10 grams of fiber, and are available in a variety of flavors, including blueberry vanilla and almond, dark chocolate sea salt caramel and vanilla fruit and nut. With 2 to 4 grams of net carbs, Atkins meal bars contain 13 to 17 grams of protein, and are available in 13 different flavors.

Medifast Company Profile

Medifast, Inc. produces, distributes and sells weight loss, weight management, and healthy living products, and other consumable health and nutritional products. The Company’s product lines include weight loss, weight management, and healthy living meal replacements, snacks, hydration products, and vitamins. Its business units include Optavia, Medifast Direct, Franchise Medifast Weight Control Centers (MWCC) and Medifast Wholesale. Optavia is a personal coaching division of the Company that consists of Optavia Coaches, who provides coaching and support to clients utilizing the Optavia platform. Medifast Direct is its direct-to-consumer business unit that allows customers to order Medifast products directly through its Website or its in-house call center. The MWCC business unit sells product through franchise and reseller locations, which offers structured programs and a team of professionals to help customers achieve weight-loss and weight-management success at center locations.

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