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Unemployment Shrinks to 4.3%, Weight Watchers Gains Big

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Friday, August 4th, 2017

Non-farm payrolls this morning outperformed expectations of a gain of 180K new jobs in the month of July with a read of 209K. The Unemployment rate has fallen to 4.3%, consistent with other strong U.S. labor market metrics we’ve seen elsewhere of late. June and May jobs numbers were both revised upwards: 222K to 231K and 145K to 152K, respectively.

There were no negative spots in this report from the Bureau of Labor Statistics (BLS) for last month: Private sector jobs brought in 205K and Government made up the remaining 4000 new hires. Food and Drinking establishments brought in 53K jobs, Professional and Business Services posted 49K and Healthcare filled 39K new positions. The Labor Force Participation Rate ticked up slightly to 62.9%, and the labor force overall grew by 349K. The U6, aka “real unemployment,” stayed unchanged at 8.6%.

Average Hourly Earnings rose 0.3% in July, and 2.5% year over year. The Average Workweek remained the same as in June, at 34.5 hours. The last three months have averaged job growth of 195K, and 184K year to date. These are very good numbers any way you slice them, and still without any major policy shifts from the Trump administration thus far, such as infrastructure investment and corporate repatriation from tax reforms.

Weight Watchers Gains Big

After Thursday’s closing bell, Weight Watchers (WTW - Free Report) posted a big Q2 earnings beat, reporting 67 cents per share as opposed to the 50 cents in the Zacks consensus. This represents a 34% earnings beat, which is exactly the average beat over the trailing four quarters. Revenues of $342 million in the quarter rose 10% from Q2 2016.

Even stronger is the company’s earnings guidance for full-year 2017, which rose from a range of $1.40-1.50 to $1.57-1.67 as of yesterday afternoon. Shares shot up 16% and remain there ahead of today’s bell. But here’s the real jaw-dropper: Weight Watchers stock is now up 235% YEAR TO DATE!

Tip of the cap to Oprah Winfrey here, who bought 10% of Weight Watchers stock (in exchange for the use of her image, etc., which has created best-sellers, launched whole careers and more) in October 2015 when the stock was selling for under $7 per share. It’s assumed her involvement with WTW is at least partly to credit this company’s enormous success; is there more room to grow big from weight-loss here? The stock is currently a Zacks Rank #3 (Hold) with a Style Score of A.

Mark Vickery
Senior Editor

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