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WW International (WW - Free Report) , a Zacks Rank #5 (Strong Sell) stock, is a global provider of weight management services and products. The company’s offering is comprised of nutritional, activity, behavioral, and lifestyle tools and approaches to weight loss. WW also provides wellness and weight management-based digital subscription services as well as various consumer products such as snacks, cookbooks, and kitchen tools. Formerly known as Weight Watchers, WW International was founded in 1961 and is headquartered in New York, NY.
The Zacks Rundown
WW is part of the Zacks Leisure and Recreation Services industry group, which currently ranks in the bottom 40% out of approximately 250 industries. Because this industry is ranked in the bottom half of all Zacks Ranked Industries, we expect it to underperform the market over the next 3 to 6 months. Also note the unfavorable valuation characteristics for this group below:
Image Source: Zacks Investment Research
Candidates in the bottom half of industry groups can often represent solid potential short candidates. While individual stocks have the ability to outperform even when included in poor-performing industries, their industry association serves as a headwind for any potential rallies. WW keeps trying to shed the added weight, but the stock keeps having trouble as it continues to make a series of lower lows.
Recent Earnings Misses
After a fairly long track record of successfully beating earnings estimates, WW has hit a cold streak lately as the company has missed the mark in two out of the past three quarters. Even in the most recent Q4 earnings announcement back in March, WW simply met expectations of $0.35/share. Revenue estimates missed expectations during the fourth quarter, and the company provided a full-year outlook that was well below forecasts.
The weight management company has posted an average earnings miss of -5.14% over the past four quarters. Consistently falling short of (or barely meeting) earnings estimates is a recipe for underperformance, and WW is no exception.
Deteriorating Outlook
Analysts have decreased EPS estimates for WW across the board. The Q1 estimate has declined -154.55% in the past 60 days to $-0.28, which would represent a -40% earnings regression versus the same quarter last year. Second-quarter estimates have fallen -31.15% to $0.42/share.
For the year, analysts have slashed 2022 EPS estimates by -36.93% to $1.11, translating to negative growth of -18.98% versus last year. Falling earnings estimates are always a concern, but a decline of this magnitude is a big red flag. If the company continues its recent streak of earnings misses, more pain will likely be ahead for the stock. Negative growth year-over-year is the type of trend that bears like to see.
Technical Trend
As illustrated below, WW is in a sustained downtrend. Notice how the stock has plunged below both the 50-day and 200-day moving averages as signaled by the blue and red lines, respectively. The stock is making a series of lower lows. Also note how both moving averages have rolled over and are sloping down – another good sign for the bears:
Image Source: StockCharts
The death cross, a technical pattern in which a stock’s 50-day moving average crosses below the longer-term 200-day moving average, occurred last year. The stock has fallen over 66% in the past year and is showing no signs of a bottom.
Final Thoughts
Recent earnings misses and an unpredictable equity market don’t exactly favor bullish WW investors. Our Zacks Style Scores depict a weakening outlook for this stock, as WW is rated a ‘C’ in our Growth category and a ‘D’ for our Momentum category. A deteriorating fundamental and technical backdrop show that this stock is fighting an uphill battle.
Falling future earnings estimates are a big red flag and need to be respected. These will likely serve as a ceiling to any potential rallies, nurturing the stock’s downtrend. The fact that WW is part of one of the worst-performing industry groups simply adds another headwind to a long list of concerns. Potential investors should only think about including this stock in their portfolio as part of a hedge or short strategy. Bulls will want to steer clear of an overvalued WW until the situation shows signs of a turnaround.
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Bear of the Day: WW International, Inc. (WW)
WW International (WW - Free Report) , a Zacks Rank #5 (Strong Sell) stock, is a global provider of weight management services and products. The company’s offering is comprised of nutritional, activity, behavioral, and lifestyle tools and approaches to weight loss. WW also provides wellness and weight management-based digital subscription services as well as various consumer products such as snacks, cookbooks, and kitchen tools. Formerly known as Weight Watchers, WW International was founded in 1961 and is headquartered in New York, NY.
The Zacks Rundown
WW is part of the Zacks Leisure and Recreation Services industry group, which currently ranks in the bottom 40% out of approximately 250 industries. Because this industry is ranked in the bottom half of all Zacks Ranked Industries, we expect it to underperform the market over the next 3 to 6 months. Also note the unfavorable valuation characteristics for this group below:
Image Source: Zacks Investment Research
Candidates in the bottom half of industry groups can often represent solid potential short candidates. While individual stocks have the ability to outperform even when included in poor-performing industries, their industry association serves as a headwind for any potential rallies. WW keeps trying to shed the added weight, but the stock keeps having trouble as it continues to make a series of lower lows.
Recent Earnings Misses
After a fairly long track record of successfully beating earnings estimates, WW has hit a cold streak lately as the company has missed the mark in two out of the past three quarters. Even in the most recent Q4 earnings announcement back in March, WW simply met expectations of $0.35/share. Revenue estimates missed expectations during the fourth quarter, and the company provided a full-year outlook that was well below forecasts.
The weight management company has posted an average earnings miss of -5.14% over the past four quarters. Consistently falling short of (or barely meeting) earnings estimates is a recipe for underperformance, and WW is no exception.
Deteriorating Outlook
Analysts have decreased EPS estimates for WW across the board. The Q1 estimate has declined -154.55% in the past 60 days to $-0.28, which would represent a -40% earnings regression versus the same quarter last year. Second-quarter estimates have fallen -31.15% to $0.42/share.
For the year, analysts have slashed 2022 EPS estimates by -36.93% to $1.11, translating to negative growth of -18.98% versus last year. Falling earnings estimates are always a concern, but a decline of this magnitude is a big red flag. If the company continues its recent streak of earnings misses, more pain will likely be ahead for the stock. Negative growth year-over-year is the type of trend that bears like to see.
Technical Trend
As illustrated below, WW is in a sustained downtrend. Notice how the stock has plunged below both the 50-day and 200-day moving averages as signaled by the blue and red lines, respectively. The stock is making a series of lower lows. Also note how both moving averages have rolled over and are sloping down – another good sign for the bears:
Image Source: StockCharts
The death cross, a technical pattern in which a stock’s 50-day moving average crosses below the longer-term 200-day moving average, occurred last year. The stock has fallen over 66% in the past year and is showing no signs of a bottom.
Final Thoughts
Recent earnings misses and an unpredictable equity market don’t exactly favor bullish WW investors. Our Zacks Style Scores depict a weakening outlook for this stock, as WW is rated a ‘C’ in our Growth category and a ‘D’ for our Momentum category. A deteriorating fundamental and technical backdrop show that this stock is fighting an uphill battle.
Falling future earnings estimates are a big red flag and need to be respected. These will likely serve as a ceiling to any potential rallies, nurturing the stock’s downtrend. The fact that WW is part of one of the worst-performing industry groups simply adds another headwind to a long list of concerns. Potential investors should only think about including this stock in their portfolio as part of a hedge or short strategy. Bulls will want to steer clear of an overvalued WW until the situation shows signs of a turnaround.