NEW YORK (TheStreet) -- Shares of Weight Watchers International (WTW) - Get Weight Watchers International, Inc. Report had a huge upside move when Oprah entered the picture, but the bump looks like it has run its course.
If you were long WTW three or four months ago, at around $6, you made your year -- Sell now. Book the profits and figure out your bonus.
WTW rocketed higher in October, with a surging On-Balance-Volume (OBV) line. The OBV line has flattened out and the slow stochastic indicator is coming down from an overbought sell signal. Not convinced? Look at the momentum study -- and bearish divergence of the higher highs in price and the equal highs from the momentum study (M=V-vx).
This longer view of WTW shows us two things. One, the rise was rapid and steep, and our slow stochastic indicator is very overbought. Second, move your eyes along the $30 level and notice how it has been support in late 2013 and resistance in 2014. I suspect it will again act as resistance. Besides, who wants to be long Weight Watchers during Thanksgiving?
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 some concerns, 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).
- In its most recent trading session, WTW has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
- The revenue fell significantly faster than the industry average of 14.6%. 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
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.