Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Weight Watchers International, Inc. Surged Again Today

By Bradley Seth McNew - Updated Mar 1, 2017 at 5:04PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The stock already got a lift yesterday even before the release of its expectation-beating earnings report.

What happened

Weight Watchers International, Inc. (WW 0.83%) shares were up as much as 38% during trading hours today after the company posted Q4 and full-year earnings that exceeded analyst expectations, including strong 2017 guidance. 

So what

Weight Watchers' shares had gotten a nice lift yesterday after its peer in the dieting industry, NutriSystem (NTRI), released better-than-expected 21% sales growth for 2016 year over year. Turns out the market was right to think that Weight Watchers' own growth in 2016 would also be positive, as its earnings reported after market close yesterday showed sales for the fourth quarter up 3% year over year and profit jumping to $0.20 per share compared with an $0.18-per-share loss in Q4 2015.  

A smiling woman speaking to a group of Weight Watchers meeting participants in front of a sign that reads "I'm not here to be average, I'm here to be awesome."

Image source: Weight Watchers International, Inc.

Weight Watchers' Q4 success was driven by an increase in memberships, up 10% year over year to 2.6 million, including a strong showing in international growth. The company also raised guidance for full-year 2017, saying that it expects to earn between $1.30 to $1.40 per share for the year, compared with $1.03 per share for full-year 2016. 

Now what

Weight Watchers has seen some early success with its newly updated weight-loss program, which is being marketed with the help of Weight Watchers investor Oprah Winfrey and received various "Best Diets of 2017" awards from U.S. News & World Report. Weight Watchers has seen some impressive growth in the last few months, and after today, its stock price is up nearly 80% over the last six months.

Still, Weight Watchers is struggling to regain lost ground after a massive fall from its peak of around $80 in 2012, and shares are still down around 80% from those highs even after today's huge boost. Furthermore, the company faces some serious headwinds now not only from increased mobile app competition but from being without a CEO as well since its former chief executive left in 2016. It also has a substantial amount of debt on its balance sheet that looks like a long-term risk.

Still, if Weight Watchers can continue to post these kinds of member growth numbers, it could certainly make up some more of that lost ground in the quarters ahead. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

WW International, Inc. Stock Quote
WW International, Inc.
WW
$7.25 (0.83%) $0.06
Nutrisystem, Inc. Stock Quote
Nutrisystem, Inc.
NTRI

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.