Jamieson Wellness Inc. (TSX:JWEL), one of the world’s leading manufacturers and marketers of sports nutrition products and specialty supplements, announced its fiscal 2017 fourth-quarter and full-year earnings results after the market closed on Thursday, and its stock responded by falling 0.77% in Friday’s trading session. Let’s break down the results and the fundamentals of its stock to determine if we should be long-term buyers today.
Breaking down the earnings report
Here’s a quick breakdown of 10 of the most notable statistics from Jamieson’s three-month period ended December 31, 2017, compared with the same period in 2016:
|Metric||Q4 2017||Q4 2016||Change|
|Jamieson Brands revenues||$65.55 million||$55.19 million||18.8%|
|Strategic Partners and Eliminations revenues||$18.77 million||$10.51 million||78.7%|
|Total revenues||$84.32 million||$65.70 million||28.3%|
|Gross profit||$30.90 million||$23.70 million||30.3%|
|Gross margin||36.6%||36.1%||+50 basis points|
|Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA)||$18.85 million||$14.73 million||28.0%|
|Adjusted EBITDA margin||22.4%||22.4%||Unchanged|
|Adjusted net income||$9.75 million||$5.10 million||91.1%|
|Adjusted diluted earnings per share (EPS)||$0.25||$0.13||92.3%|
|Cash flows from operating activities||$17.55 million||$12.64 million||38.8%|
And here’s a quick breakdown of 10 notable statistics from Jamieson’s 12-month period ended December 31, 2017, compared with the same period in 2016:
|Metric||Fiscal 2017||Fiscal 2016||Change|
|Jamieson Brands revenues||$237.00 million||$192.50 million||23.1%|
|Strategic Partners and Eliminations revenues||$63.62 million||$55.84 million||13.9%|
|Total revenues||$300.62 million||$248.33 million||21.1%|
|Gross profit||$104.85 million||$80.81 million||29.7%|
|Gross margin||34.9%||32.5%||+240 basis points|
|Adjusted EBITDA||$61.48 million||$46.79 million||31.4%|
|Adjusted EBITDA margin||20.5%||18.8%||+170 basis points|
|Adjusted net income||$27.58 million||$10.91 million||152.8%|
|Adjusted diluted EPS||$0.70||$0.28||150.0%|
|Total assets||$512.56 million||$405.18 million||26.5%|
Outlook on the year ahead
In the press release, Jamieson provided its outlook on fiscal 2018, calling for the following results:
- Revenue in the range of $325-335 million, representing growth of 8-12% from 2017
- Adjusted EBITDA in the range of $67-69 million, representing growth of 9-13% from 2017
- Adjusted diluted EPS in the range of $0.83-0.87, representing growth of 18-25% from 2017
What should you do with the stock now?
The fourth quarter capped off a phenomenal year for Jamieson, and its outlook calls for very strong growth in 2018, so I think its stock should have responded by rallying on Friday; that being said, I would buy the stock today for one fundamental reason in particular: it’s undervalued based on its growth. Jamieson’s stock currently trades at 29.4 times fiscal 2017’s adjusted diluted EPS of $0.70, which seems fair, but it trades at just 24.2 times the median of its adjusted diluted EPS outlook of $0.83-0.87 for fiscal 2018, which is inexpensive given its current double-digit percentage earnings-growth rate and its long-term growth potential.
It’s also worth noting that Jamieson pays a quarterly dividend of $0.08 per share, representing $0.32 per share on an annualized basis, which gives it a respectable 1.6% yield. Any dividend is great for a high-growth stock like Jamieson, and the best way to utilize it is to make sure your investment account is set to have all dividends reinvested (with a DRIP program).
With all of the information provided above in mind, I think all Foolish investors should consider initiating small positions in Jamieson Wellness today with the intention of adding to those positions on any significant pullback in the future.
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Fool contributor Joseph Solitro has no position in any of the stocks mentioned.