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

Jamieson Wellness Inc. (TSX:JWEL) watched its stock fall 0.77% on Friday following its Q4 2017 earnings release. What should you do now?

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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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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joseph Solitro has no position in any of the stocks mentioned.

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