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.
Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you. Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. Simply click here to discover how you can take advantage of this.
Fool contributor Joseph Solitro has no position in any of the stocks mentioned.