Barbarian At The Gate: Weight Watchers International (WTW)

Trade-Ideas LLC identified Weight Watchers International (WTW) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Weight Watchers International

(

WTW

) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Weight Watchers International as such a stock due to the following factors:

  • WTW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $163.0 million.
  • WTW has traded 4.7 million shares today.
  • WTW traded in a range 204.8% of the normal price range with a price range of $3.48.
  • WTW traded above its daily resistance level (quality: 328 days, meaning that the stock is crossing a resistance level set by the last 328 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on WTW:

Weight Watchers International, Inc. provides weight management services worldwide. The company operates through North America, United Kingdom, Continental Europe, and Other segments. WTW has a PE ratio of 46. Currently there is 1 analyst that rates Weight Watchers International a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Weight Watchers International has been 4.8 million shares per day over the past 30 days. Weight Watchers International has a market cap of $1.5 billion and is part of the services sector and diversified services industry. The stock has a beta of 2.70 and a short float of 73.4% with 2.65 days to cover. Shares are down 3.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Weight Watchers International as a

sell

. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • WEIGHT WATCHERS INTL INC's earnings per share declined by 43.3% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, WEIGHT WATCHERS INTL INC reported lower earnings of $1.74 versus $3.63 in the prior year. For the next year, the market is expecting a contraction of 57.5% in earnings ($0.74 versus $1.74).
  • The share price of WEIGHT WATCHERS INTL INC has not done very well: it is down 9.61% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Diversified Consumer Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 42.5% when compared to the same quarter one year ago, falling from $37.89 million to $21.80 million.
  • WTW, with its decline in revenue, underperformed when compared the industry average of 0.5%. Since the same quarter one year prior, revenues fell by 20.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for WEIGHT WATCHERS INTL INC is rather high; currently it is at 50.00%. Regardless of WTW's high profit margin, it has managed to decrease from the same period last year.

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