Weight Watchers (WTW) Stock Soars, Management Says 'Oprah Effect Legendary'
NEW YORK (TheStreet) -- Weight Watchers International (WTW) - Get Report shares are flying 12.64% to $26.92 on Wednesday after management made optimistic comments about the company's future at the Global Consumer & Retail conference last night.
The company, which provides weight management services worldwide, is confident on its future growth as it recently lifted its full year 2015 earnings outlook to a range between 64 cents and 74 cents a share, up from its previous range of 57 cents and 72 cents a share.
A month ago, media proprietor Oprah Winfrey announced that she is investing in the company, paying $43.2 million to take a 10% stake.
Additionally, Weight Watchers acknowledged during the conference that this action will have a significant impact on the company.
"The Oprah effect is legendary so having a long-term partnership with her to amplify everything we do and provide strategic insight onto our transformation is fabulous," said Chief Financial Officer Nick Hotchkin.
Separately, TheStreet Ratings team rates WEIGHT WATCHERS INTL INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
We rate WEIGHT WATCHERS INTL INC (WTW) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. 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 analysis by TheStreet Ratings Team goes as follows:
- 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.
- You can view the full analysis from the report here: WTW