Crash dieting is no fun, particularly when it's the stock price of one your holdings that's getting slimmed down. Unfortunately for well-known diet play Weight Watchers (NYSE:WTW), there could still be more to lose before the stock's valuation looks svelte.

This quarter strikes me as rather run-of-the-mill. Overall revenue was up less than 4% atop flat attendance, gross margins improved a bit due to better pricing, and a delay in deploying sales and marketing dollars pushed up the margins for the period. Higher interest expense ate some of this back, though, and net income growth was about 10.5%. Free cash flow was also lower on a year-over-year basis, but I generally advise against getting worked up about cash flow on a quarter-by-quarter basis.

As I said, attendance trends were not compelling. North America was up 5% (and that's certainly good), but the U.K. was down 17%; that dragged international results down 7% and overall results to a level basically unchanged from last year. And though attendance was flat, overall meeting revenue did increase 2% -- probably from that better pricing.

Even though the stock is now close to a 52-week low, I'm no big fan. The returns on capital are not the problem -- Weight Watchers is an incredible performer by that standard. But when I do a discounted cash flow analysis -- even with healthy growth assumptions (mid-teens) -- I don't find it to be undervalued. What's more, I think the going is going to get harder, not easier, for this company. NutriSystem (NASDAQ:NTRI) has definitely rediscovered its mojo and Jenny Craig is still a viable competitor.

Looking a bit further ahead, though, I'm not sure how Weight Watchers will win the long-term battle with pharmaceuticals. So-called "lifestyle drugs" are popular targets for pharmaceuticals and biotechs, and I can't believe that most overweight individuals wouldn't prefer to take a pill rather than attend a weight-loss meeting. I'm not saying that's the right decision, but it seems like a likely one for most consumers.

Weight Watchers' ample cash flow certainly has value, but today's price seems to more than account for it. Keep in mind, though, that this has periodically been a popular stock with the analyst community, so beware of future cheerleading.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).