Weight Watchers International (WTW) Highlighted As Weak On High Volume

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Weight Watchers International ( WTW) as a weak on high relative volume 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 $6.3 million.
  • WTW has traded 227,600 shares today.
  • WTW is trading at 4.77 times the normal volume for the stock at this time of day.
  • WTW is trading at a new low 4.15% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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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 4.9. Currently there are no analysts that rate Weight Watchers International a buy, 2 analysts rate it a sell, and 2 rate it a hold.

The average volume for Weight Watchers International has been 1.6 million shares per day over the past 30 days. Weight Watchers International has a market cap of $483.7 million and is part of the services sector and diversified services industry. The stock has a beta of 1.62 and a short float of 56.6% with 13.93 days to cover. Shares are down 65.9% 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 generally disappointing historical performance in the stock itself, feeble growth in its earnings per share, deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 56.82%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 148.14% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • WEIGHT WATCHERS INTL INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 65.5% in earnings ($0.60 versus $1.74).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Diversified Consumer Services industry. The net income has significantly decreased by 148.0% when compared to the same quarter one year ago, falling from $30.80 million to -$14.78 million.
  • Net operating cash flow has significantly decreased to $10.33 million or 53.22% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • WTW, with its decline in revenue, underperformed when compared the industry average of 10.5%. Since the same quarter one year prior, revenues fell by 10.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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