Weight Watchers Int
(WTW - Snapshot Report
) recently spiked more than 40% in one day after reporting strong Q4 results and offering FY 2011 earnings guidance that was well ahead of analyst expectations. With estimates on the upswing and a bullish growth projection, this Zacks #1 rank stock is on a strict momentum diet.
Weight Watchers Int, Inc. operates as a weight management services company worldwide. The company was founded in 1961 and has a market cap of $4.53 billion.
Revenue for the period was up 16% from last year to $357 million. Earnings were also strong, coming in at 64 cents, 14% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 6% over the last four quarters.
The good quarter was driven by a strong showing in North America, where meeting revenue was up 15% from last year. But the biggest gains came from Weight Watchers online, where Internet revenue was up 31%.and active online subscribers up 38% from last year.
Weight Watchers also continues to chip away at its debt, with total debt down $45 million from last year to $1.365 billion. Cash and equivalents of $41 million are down about $5 million from last year.
Even though WTW's Q4 results were very solid, the company's very bullish guidance is what triggered the big rally. Analysts have since followed, with the current year up 97 cents to $3.72 and the next-year estimate gaining 47 cents to $4.29, a solid 15% growth projection.
But in spite of the big gains, the valuation picture still looks solid, with a PEG ratio (PE/Growth) only slightly over 1, the traditional benchmark for value.
On the chart, WTW gapped open higher to finish the session with a 42% gain on the good quarter. Since then, shares traded mostly sideways before recently jumping again and moving with $1 of the 52-week high at $66.56. Look for support from the short-term low on any weakness, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.