NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and weak operating cash flow.
Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 1.8%. Since the same quarter one year prior, revenues slightly increased by 0.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for WEIGHT WATCHERS INTL INC is rather high; currently it is at 59.30%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 10.80% is above that of the industry average.
- Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.10 is very low and demonstrates very weak liquidity.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 33.07%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 26.00% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, WTW is still more expensive than most of the other companies in its industry.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Diversified Consumer Services industry average. The net income has significantly decreased by 25.8% when compared to the same quarter one year ago, falling from $73.59 million to $54.61 million.
Weight Watchers International, Inc. engages in the provision of weight management services primarily in North America, the United Kingdom, Continental Europe, Australia, and New Zealand. The company has a P/E ratio of 14.5, equal to the average diversified services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Weight Watchers International has a market cap of $3.1 billion and is part of the
industry. Shares are up 1.6% year to date as of the close of trading on Tuesday.
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-- Written by a member of TheStreet Ratings Staff