The Fattest Earnings call this week - NutriSystem

NutriSystem Inc. (NASDAQ:NTRI) has been hammered in the last month, down 42% after they lowered their Q3 07 forecast on Oct 4th. The stock is down 58% in the last 6 months and they finally report earnings on Wednesday (10/24) after pissing of investors and Wall Street. So with the stock now at $27, should you binge or purge?

Just look at the last three months of activity on NTRI, it's downright horrible. I can't imagine many investors have doubled-down since all the bad news but if they have, yikes. However for investors looking for a bargain stock, this may be your ticket. How much lower could it go if they fumble on the call?

The Short % of the Float is big right now, at 42% as of last month. Why? (a) They've been hit with countless lawsuits saying the company was signing up fewer new customers and was not performing according to internal expectations; (b) that the Company’s costs of acquiring new customers were significantly increasing; (c) that the Company’s performance was being negatively impacted by competition from other weight loss products on the market; and (d) as a result of the foregoing, Defendants lacked a reasonable basis for their positive statements about the Company and its prospects.

Besides every slim shady law firm in the country out for their blood, NTRI has been downgraded by everyone. NutriSystem now expects to report a 7% decline in new customers to 218,000, as compared to the prior guidance of 245,000. The EPS estimates for 2007 and 2008 have been reduced from $3.46 to $3.09 and from $4.10 to $3.50, respectively.

If the news on the call gets even worse shares will fall even further and if that happens, it will be time to buy. But at this point, it might not be a bad idea to risk a few bucks. Fellow Masters, the bad news is in, so if NTRI squeeks by or even beats the Street, hello 8% rally in one day.

NutriSystem has been around since 1972 and despite the recent setback, they will be around for a lot longer.

Article written by Eric Cheshier

Co-Founder of theStockMasters.com