DIET

[Jimbo]

Anyways $6.40 - $6.55 range is a good entry if there is a pullback.

DIET came back as expected but missed my upper entry level by $0.03 





Looking forward for tomorrow 

[David Randolph]

What's going on here, I can't post the full analysis? Let me call Ramsburg, probably it has something to do with the firewall system 

[David Randolph]

I want to study the differences between DIET and NTRI, since they are exactly in the same business, yet NTRI is worth 10 times more than DIET.

Let's compare the two companies history on the # of shares outstanding, the current ratio, cash + equivalents, revenues and EPS.

1. Number of shares outstanding



Both companies increased their share count since 1999, no differences here.

2. Current Ratio



NTRI has a much better current ratio, that is, it has more assets relative to liabilities than DIET.

3. Cash and Equivalents



Both companies have more or less the same amount of cash, but NTRI cash rose $5M over the last year and DIET's cash declined $1M. Still, not a significant difference here.

4. Revenues



The two companies were neck and neck (with a slight advantage for DIET) until 2005 began. At that point, something happened, because NTRI's revenues had a huge jump where as DIET continued with its historic growth rate.

5. EPS



2004 and 2005 brought quite different destinies for the two companies.

Let's analyze this table from Yahoo (it is a bit old, but):



DIET's market cap is 1/10 of NTRI's. Both companies have roughly the same number of employees. Revenue growth is much faster at NTRI. DIET's revenue is about 1/3 of NTRI's. NTRI has a gross margin of 48%, but DIET has a gross margin of 86% (this happens probably because of a change in NTRI's business model). Price to Sales ratio is much higher on NTRI than on DIET.

I think that if we compound all this information we get to the conclusion that DIET is worth more than 1/10 of NTRI, so it could be a «value» play.

But that's not the interesting part. The interesting part is that DIET is following NTRI on its footsteps, also entering the same high growth, high profit arena, the food delivery program. This means revenues and profits without a doubt will increase at DIET, but can it go, again, neck in neck with its competitor?

I understand that pricing at DIET is much higher, as valueseeker says, it is $800 for DIET a month and only $300 for NTRI, which seems to be a big disadvantage. But I have to confirm this and look for a explanation.

Also, what was NTRI's available pool (I mean, people following their website), and what's DIET's?

I feel encouraged by what I see, on the next update I'll compare the two business models on the food delivery program, clearly what makes the big difference between the two companies.

I'll continue holding DIET.

[Jimbo]

David and everyone holding,

There is eDiets.com's investor presentation scheduled for 3:40 p.m. EST, Thursday, January 12, 2006. The presentation will be webcast live and archived online on the Investor Relations section of the Company's website at www.eDiets.com/investors under "Webcast Links."

http://biz.yahoo.com/bw/060109/20060109005856.html?.v=1

Hope to get a much clear picture 

[KCScott]

4. Revenues



The two companies were neck and neck (with a slight advantage for DIET) until 2005 began. At that point, something happened, because NTRI's revenues had a huge jump where as DIET continued with its historic growth rate.

My wife had been telling me to look at NTRI since last summer. I wrote it off as a fad and payed no attention to the stock, instead focusing on Chinese water filters (anyone wanna buy some?).

So I asked again tonight, and my wife who is all things "Pop Culture" gave me the answer and her name is Zora.

Zora was on a tacky reality TV show called "Joe Millionaire".
The basic concept was a millionaire selects his future bride from a group of 20 women.
This show was a huge ratings winner during it's run, with women being the prime demographic.

In one episode Zora was supposed to wear a Ball Gown to one of the "Dates" but she couldn't fit into it:



I guess millions of women watching felt empathy with that situation.
I'm informed that on the merits of her personality, Joe Millionaire picked her.

At the time Zora won the contest she was not obese, just big:



Not long afterwards, she went on Nutrisystems Diet and lost 17 pounds in 6 weeks



She became a National spokesperson around the end of 2004 (Which would coincide with the product taking off)

Here's the story:   http://www.blast.net/hart/zora-nutrisystem.htm

I asked my wife about e-diet and her first thoughts about it was she didn't like the name.
"Women don't want to think they're on Diets", she said.
She thought the name Nutrisystems had appeal because it sounds "Nutritious".

Who am I to argue with logic like that since she pointed me to the # 1 stock of 2005 and I ignored it.

[irod]

Quick! Someone e-mail that marketing strategy to DIET's marketing people and directors!

[David Randolph]

I'm burning my eyes reading things about DIET and NTRI ... I still can't confirm the monthly price of NTRI's service (it isn't clear on their website if that price is weekly or monthly ! Since you can make the program for one week only, perhaps it is a weekly price like DIET's. If this is the case DIET is much more competitive than NTRI.)

Also, just about $300 a month for, say, 4 meals a day, gives me just $2.67 a meal, I don't know if I wanna eat that 

KCScott said his wife didn't like the name ... but my wife loved it ! She said the name says it all and wish we lived on the USA so she could enter one of those programs (well, not now, since our second son is coming  ).

I think DIET's website looks much better than NTRI's ... and the name FreshCuisine is an attractive name (maybe the difference in price is explained by this fresh/non fresh thing?).

NTRI's market cap is 10 times larger than DIET's. I don't think this is fair, I think both companies will be worth about the same in 3 to 5 years time. NTRI's food delivery program started first, that's why you see the big jump in revenues. I think DIET will see the same jump now its food delivery program also started.

Now I'm prepared to say: I'll hold DIET for the long term !

[patriotmp]

 

  David,

     My roommate does the nutrisystem diet and it is 300 for the month.  Hope that helps

[David Randolph]

 

  David,

     My roommate does the nutrisystem diet and it is 300 for the month.  Hope that helps

Thanks a lot patriotmp  It sure helps. So pricing on DIET is 2.66 times higher than on NTRI. This also means it needs just about 1/3 of the clients to get the same revenue. Also, margins will be larger. An average American makes about $3,000 a month in disposable income, right? To pay $800 for food doesn't seem a lot to me. Of course the company is targeting the high income portion of the economy, probably the ones who care most about their health and physical appearance. (also don't forget this business isn't considered a subscriber based service, because probably people will make just one or two months of diet, not years. People may pay a higher price because it is just a 2 or 3 times show).

I think this higher price/better quality is a wise strategy from DIET. Anyway, I have no doubts revenue and profit will increase significantly from this point, as the share price.

[snowcat]

Price does not matter in a lot of cases...........

UnderArmour is doing well with $50 underwear (UARM)

True Religion is doing well with $200 jeans (TRLG)

And look at SBUX, bottled water, Godiva Chocolates, Ben & Jerry's Ice Cream, Grey Goose Vodka and every other product that you could probably get cheaper.  But people like the product.

And if you look at any of these stocks, they have not been hurting.

[molly]

I have ordered the nutrisystem food...and the $300.00 is just half the price.  You also have to buy fresh fruit, vegetables and dairy products to go along with the food.  The food is not very good....I did not reorder.

[David Randolph]

I have ordered the nutrisystem food...and the $300.00 is just half the price.  You also have to buy fresh fruit, vegetables and dairy products to go along with the food.  The food is not very good....I did not reorder.

Thanks for the great info molly, this is really what we need to know if the higher price/higher quality on DIET vs NTRI makes sense or not. I believe it does.

The market is starting to see the wonderfull long term opportunity on DIET, as the company follows NTRI's footsteps, but does it better !

DIET will soon be one of the 2 stocks held on the Long Term on Fire Portfolio (joining GIGM), for a maximum of 10 holdings.

Also, for trading purposes only, DIET continues to be an attractive pick, the stock had a nice white marubozu to new short term highs with volume above average.

[David Randolph]

DIET started their food delivery program 12 days ago, so we'll probably see revenues growing rapidly from this point, as happened with NTRI.

Here's the complete press release:

«eDiets.com(R) Expands its Offerings With Nationwide Premium Food Delivery Service
FreshCuisine(TM) Designed After eDiets.com Subscribers Show Desire for Superior Alternative in Home Food Delivery
Jan 5, 2006 8:30:00 AM

DEERFIELD BEACH, Fla., Jan. 5 /PRNewswire-FirstCall/ -- eDiets.com, Inc. (Nasdaq: DIET), announced today its entry into the food delivery service market with the launch of FreshCuisine(TM), a chef-prepared fresh food delivery service, which provides over 400 delicious, nutritionally sound menu items to those demanding a convenient and effective method to eat great food and lose weight. eDiets.com developed the FreshCuisine service to be individually tailored to each customer's tastes while still meeting weight loss goals. To complement the food service delivery, registered dieticians will be available by phone and online to provide counseling, addressing customer needs ranging from health issues such as diabetes or general weight loss concerns.

FreshCuisine was created in response to user feedback on the eDiets.com website. Users expressed interest in adopting well-balanced eating plans, but claimed their busy lifestyles prevented them from taking weekly trips to the grocery store and preparing home-cooked meals. FreshCuisine solves these problems by providing personalized meals -- seven breakfasts, seven lunches, seven dinners, and seven snacks per week to members.

Home food delivery service has become an increasingly popular component of the $48 billion-a-year diet industry. eDiets brings ten years experience of working with consumers across the country enabling them to establish a healthier lifestyle and allowing them to tailor their weight loss programs. The FreshCuisine menu was developed in partnership with a leading supplier that offered the most options, enabling customers to create plans that include only their favorite foods FreshCuisine also stands apart from competitors in that its meals are delivered on a weekly basis and are prepared by professional chefs.

"One of our goals with FreshCuisine is to get people to learn that eating healthy can be both delicious and satisfying at the same time," explains eDiets.com chief nutritionist Susan L. Burke. "The only way for people to maintain healthy eating habits is if they enjoy what they are eating. FreshCuisine allows individuals to select their own meals. If someone enjoys eating an omelet everyday, this program will make sure he can still do that and lose weight at the same time."

Customers order the eDiets.com service by visiting http://www.freshcuisine.com. After filling out a brief questionnaire describing their current health conditions, weight goals and food preferences, chefs prepare meals and ship them to customers' homes. The plan fits requirements for low sodium, low fat, low cholesterol, carb-controlled, and heart smart diets.

    Subscribers to FreshCuisine will receive:

     * Choice of food from a menu of several hundred items
     * Online and phone access to nutritionists
     * A 28-day healthy eating program designed by a professional dietician
     * Three meals per day plus one snack/dessert
     * To preserve freshness, the meals are delivered several times a month.
       State-of-the-art packaging technologies eliminate the need to add
       preservatives, and keep the food fresh.

"eDiets is bringing greater convenience than ever before to health- conscious consumers," said Ciaran G McCourt, President of eDiets.com. "We believe the combination of the convenience of our web service and the provision of tailored healthy fresh meals opens a new chapter for eDiets. It is one of many new growth initiatives that will expand our long-term growth opportunities. Consumers should have the ability to add convenience in their quest to diet without sacrificing quality, and with FreshCuisine, this is now possible."

About eDiets.com

eDiets.com, Inc. (Nasdaq: DIET) is a premier online diet, fitness, and healthy living destination offering 24/7 professional advice, information, products and services to those seeking to improve their health and longevity. Since 1997 more than two million consumers worldwide have become eDiets.com members. Among other honors, the site has been named a Forbes.com spring 2005 "Best of the Web" and "Forbes Favorite" in the diet and nutrition category, and a PC Magazine "Editors' Choice" 2004 and 2005. eDiets.com offers more than 20 personalized online nutrition and fitness programs, as well as access to a wide range of expert and peer-based online support services that are all conveniently available around the clock. Founded in 1996 and headquartered in Deerfield Beach, FL, eDiets.com operates Web sites at http://www.ediets.com, http;//www.efitness.com, http://www.ediets.de and http://www.ediets.com.es. The company also publishes a personalized online interactive magazine, along with a family of industry-leading electronic newsletters that have an opt-in circulation base of over 13 million.

For more information about eDiets.com, please call (954) 360-9022 or visit http://www.eDiets.com.»

The news says: «FreshCuisine also stands apart from competitors in that its meals are delivered on a weekly basis and are prepared by professional chefs.»

Anybody knows the periodicity of food delivery on NTRI's service?

Tomorrow I'll buy 10% of the Long Term on Fire Portfolio (or $10,000) on DIET, so I can hold the stock for the long term (more than 2 years, if everything goes as planned).

I will also continue holding DIET on the Stocks on Fire Portfolio, since the short term trend remains bullish. Today the stock had just a minor pullback on profit taking, there was no technical damage.

[David Randolph]

I bought DIET for the Stocks on Fire Portfolio at January 9th, 2006. A few analysis later, that you can find on this thread: Need a Diet? I concluded that I should hold DIET for the long term, based on its fundamentals and prospects.

Therefore, I'll buy it around today's open for the Long Term on Fire Portfolio, 10% of capital.

I will update this analysis on a bi-weekly basis, or whenever there are significant news or quarterly earnings releases. I'm expecting to hold DIET for at least 2 years, but possibly a lot more time, if everything develops in the way I'm expecting.

[metro]

Many of you may know Alan Farley at realmoney or seen him on CNBC. In talking of some stocks under $10 yesterday he mentioned DIET and in that wrote. "...Weight-control stocks can be very strong in January as overeaters resolve to live healthier lifestyles. But seasonality is winding down for this speculative sector..."

Interesting as I never figured they has a "season" to be strong. It has double in price in 6 weeks and has that 2004 resistance at 9.55.