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Jamieson Wellness Inc.’s Revenue Tops $300 Million in 2017: Time to Buy?

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.

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