International Inc. (NYSE: WTW)
in a modern social society where physical attributes are scrutinized
ever. Maybe it’s the 800 million people
posting pictures of themselves and others on Facebook, or perhaps the
just about every American between the age of 12 and 60 has a Smartphone
camera. This trend is echoed in modern societies around the world.
could also be due to the health revolution that is sweeping across the
nation. Social media and the internet
has made us more aware of our diets, including the ones that work and
that may not be so healthy. Diets of all
kinds have long been a part of global culture.
In America specifically, weight loss diets have come and gone over the
decades; especially the fads from Atkins to Grapefruit, the South beach
and many more.
past 40 years, Weight Watchers has been steady force in dieting. The
of WTW could be that they offer psychological and behavioral training
with exercise and of course meal planning and most importantly,
is now a virtual meeting place for Weight Watchers users to keep on
support themselves and others. It may also be one
of WTW‘s keys to growth in our
online world and their next leg up for the stock.
Weight Watchers got their start in Queens NY at the home of their
Nidetch. Today the company has
operations in over 30 countries around the world with nearly 30,000
Over the years, the company
has had some high profile spokespeople helping add credibility to their
and methods (which obviously work). Jennifer Hudson, Charles Barclay
Dr. Oz are currently on board.
Their stock has also gained a
bit of popularity because of a recent unusual move. In March,
WTW completed a Self-Tender Offer,
where they spent about $720 million to buy back roughly 12% (9,038,999
their shares from the marketplace at a price of $82. The
shares were retired, which increases
equity for remaining shareholders. This
move is no doubt bullish on the company’s part and perhaps a free look
trends they are seeing in the space.
U.S. News & World Report
recently published its first-ever ‘Best Diets’ rankings and Weight
ranked #1 among 20 different diet programs.
WTW is a mid-cap (5.79 billion) company that is trading at about 24.13
forward (expectations for next quarter) earnings. WTW
recently became a Zacks Rank 1 strong buy
on April 4th.
2011 sales increased 12.50% compared to full year 2010; earnings
$2.56 in FY2010 to $4.11 FY2011 and they are expected to earn $4.97 for
full year (FY2012) according to the Zacks Consensus Estimate.
Of the 7 analysts who cover Weight
Watchers, the consensus is for the company to grow earnings by 21% in
current year (FY2012) and roughly 18% in FY2013. WTW missed
marginally last quarter, but has surprised analysts to the upside 3
prior; their average surprise was a positive 7.68% over the last 4
In terms of the magnitude of
analyst estimate trends, we are seeing consensus estimates higher than
were 30 days ago for the next quarter as well as FY2012 and
Current quarter estimates have come down
about a penny over the past month. WTW
is expected to earn 77 cents when they report on Mat 11th.
Performance & Technicals
Weight Watchers stock price came into 2012 with a bang; shares leapt
to $70 in the blink of an eye. Momentum
has slowed a bit, but the pullback to these levels around $75 may
more advantageous entry for the long term investor.
comes around the $70 level as well as the 200 day moving average, which
stands at $68.50.
has just about matched the S&P 500’s performance over the past
year. It outpaced it by almost 3.3% in the past 3
months, but trailed in the last month by the same amount. All in all,
performance has been strong, but doesn’t seem overbought relative to
A Levy is the Momentum Stock Strategist for Zacks.com. He is also the
charge of the market-beating Zacks
Whisper Trader Service.