As of June 7, 2025, Medifast Inc's estimated intrinsic value ranges from $8.57 to $138.50 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $28.23 | +122.3% |
| Discounted Cash Flow (5Y) | $26.25 | +106.7% |
| Dividend Discount Model (Multi-Stage) | $8.57 | -32.5% |
| Earnings Power Value | $138.50 | +990.5% |
Is Medifast Inc (MED) undervalued or overvalued?
With the current market price at $12.70, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Medifast Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.55 | 0.88 |
| Cost of equity | 6.4% | 9.8% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 23.2% | 23.7% |
| Debt/Equity ratio | 1 | 1 |
| After-tax WACC | 5.1% | 6.8% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $26 | $197M | 77.7% |
| 10-Year Growth | $28 | $219M | 65.6% |
| 5-Year EBITDA | $19 | $118M | 62.7% |
| 10-Year EBITDA | $21 | $143M | 47.3% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $84M |
| Discount Rate (WACC) | 6.8% - 5.1% |
| Enterprise Value | $1,229M - $1,632M |
| Net Debt | $(92)M |
| Equity Value | $1,321M - $1,724M |
| Outstanding Shares | 11M |
| Fair Value | $120 - $157 |
| Selected Fair Value | $138.50 |
| Metric | Value |
|---|---|
| Market Capitalization | $140M |
| Enterprise Value | $48M |
| Trailing P/E | 0.00 |
| Forward P/E | 40.11 |
| Trailing EV/EBITDA | 6.40 |
| Current Dividend Yield | 14.26% |
| Dividend Growth Rate (5Y) | -65.95% |
| Debt-to-Equity Ratio | 1.11 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 35% | $8.47 |
| Discounted Cash Flow (5Y) | 29% | $6.56 |
| Dividend Discount Model (Multi-Stage) | 24% | $1.71 |
| Earnings Power Value | 12% | $13.85 |
| Weighted Average | 100% | $35.99 |
Based on our comprehensive valuation analysis, Medifast Inc's weighted average intrinsic value is $35.99, which is approximately 183.4% above the current market price of $12.70.
Key investment considerations:
Given these factors, we believe Medifast Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.