Should Nutrisystem (NTRI) Drop Dividend?

Shares of Nutrisystem (NASDAQ:NTRI) has struggle over the last year, and after the latest disappointing earnings report, it dropped off the table, plummeting to under $14 a share.

The current economic climate has forced weight loss companies like Nutrisystem to heavily discount to generate sales, and of course that has hammered margins and earnings.

With the current earnings estimate 46 cents a share for 2011 and 90 cents a share for 2012, that drops the company's earnings below the dividend payout, which at this time is 70 cents a share, or a yield of 5.1 percent.

There is a strong probability, and responsibility for the company to cut its dividend, even though the stock will take a big hit at that time.

Assuming that's the action Nutrisystem ultimately takes, it would be at that time investors would take a strong look at the company for a good entry point.

Nutrisystem closed Thursday at $13.73, dropping $0.09, or 0.62 percent.