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

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

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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. 

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Stocks Mentioned

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

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