Weight Watchers WTW
shares said "watch out below!" last Wednesday after the company reported Q4 results and offered lower sales and earnings guidance for 2019.
WTW stock has been in a steady downward trajectory since last summer's highs above $100 and last week's gap down from $30 to $20 saw a whopping 37 million shares change hands in what must have been a final "get me out!"
WTW has been a visitor before to the cellar of the Zacks Rank during the past two quarters and estimates were still falling right before this report. In fact, in the past 90 days up to last week's reveal, the Zacks consensus for 2019 EPS had fallen from $3.62 to $3.37.
But while price seemed to be ahead of the forecasting game, Wall Street analysts definitely were not and had no idea what was coming.
Then WTW dropped the heavy bomb: for 2019, WTW expects to generate revenue of just $1.4 billion vs. consensus expectations of over $1.65 billion. That's a 15% haircut, but the EPS trim is much bigger with company guidance of $1.25-$1.50, over 60% below expectations.
This comes as quite a shock after 2018's performance delivered 73% annual EPS growth with $2.86.
So WTW probably takes the cake for the 2018-2019 story of soar-then-crash.
For those looking to bottom feed in the wreckage, beware. If the growth collapse is this severe now, there could be other hidden bombs.
It's probably best to wait until the estimates stop going down and start going back up. The Zacks Rank will let you know.
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