Medifast (NYSE:MED) and e.l.f. Beauty (NYSE:ELF) Critical Analysis

e.l.f. Beauty (NYSE:ELF) and Medifast (NYSE:MED) are both consumer staples companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, analyst recommendations, valuation, risk and profitability.

Institutional & Insider Ownership

92.4% of e.l.f. Beauty shares are held by institutional investors. Comparatively, 95.5% of Medifast shares are held by institutional investors. 3.5% of e.l.f. Beauty shares are held by company insiders. Comparatively, 3.7% of Medifast shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares e.l.f. Beauty and Medifast’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
e.l.f. Beauty	4.47%	16.40%	7.89%
Medifast	-13.64%	-6.90%	-5.34%

Volatility and Risk

e.l.f. Beauty has a beta of 1.6, indicating that its stock price is 60% more volatile than the S&P 500. Comparatively, Medifast has a beta of 0.65, indicating that its stock price is 35% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for e.l.f. Beauty and Medifast, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
e.l.f. Beauty	1	5	9	3	2.78
Medifast	1	1	0	1	2.33

e.l.f. Beauty presently has a consensus price target of $117.50, suggesting a potential upside of 1.10%. Medifast has a consensus price target of $12.00, suggesting a potential downside of 6.18%. Given e.l.f. Beauty’s stronger consensus rating and higher probable upside, analysts plainly believe e.l.f. Beauty is more favorable than Medifast.

Earnings and Valuation

This table compares e.l.f. Beauty and Medifast”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
e.l.f. Beauty	$1.64 billion	4.20	$26.32 million	$1.45	80.15
Medifast	$385.79 million	0.37	-$18.67 million	($3.69)	-3.47

e.l.f. Beauty has higher revenue and earnings than Medifast. Medifast is trading at a lower price-to-earnings ratio than e.l.f. Beauty, indicating that it is currently the more affordable of the two stocks.

Summary

e.l.f. Beauty beats Medifast on 13 of the 15 factors compared between the two stocks.

About e.l.f. Beauty

e.l.f. Beauty, Inc. is a holding company, which engages in the provision of inclusive, accessible, clean, vegan and cruelty free cosmetics and skin care products. The company focuses on the e-commerce, national retailers and international business channels. Its brands include elf, elf skin, WELL People and KEYS soulcare. The company was founded in 2004 and is headquartered in Oakland, CA.

About Medifast

Medifast, Inc., through its subsidiaries, engages in the manufacture and sale of weight loss, weight management, and healthy living products in the United States and the Asia-Pacific. It offers bars, puffs, cereal, crunchers, drinks, hearty choices, oatmeal, pancakes, pudding, soft serve, shakes, smoothies, soft bakes, and soups under the OPTAVIA, OPTAVIA ACTIVE, and Optimal Health brand names. The company markets its products through point-of-sale transactions, as well as through ecommerce platform. Medifast, Inc. was founded in 1980 and is headquartered in Baltimore, Maryland.