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Why Weight Watchers (WTW) Could Be Positioned for a Slump
February 28, 2014
WTW MNRO CENT
Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.
One such stock that you may want to consider dropping is Weight Watchers International, Inc. ( WTW - Snapshot Report) which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #5 (Strong Sell) further confirms weakness in WTW.
A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 5 estimates moving down in the past 30 days, compared with no upward revision. This trend has caused the consensus estimate to trend lower, going from earnings of $2.78 a share a month ago to its current level of $1.41.
Also, for the current quarter, WTW has seen 4 downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to 9 cents a share from earnings per share of 48 cents over the past 30 days.
The stock also has seen some pretty dismal trading lately, as the share price has dropped 20.8% in the past month.
If you are still interested in the Consumer Services industry, you may instead consider a better-ranked stock like Monro Muffler Brake Inc. ( MNRO - Snapshot Report) .
Investors interested in the Consumer Discretionary sector may consider better-ranked stocks like Bally Technologies, Inc. and Central Garden & Pet Company ( CENT - Analyst Report) . Both carry a Zacks Rank #1 (Strong Buy). With favorable Zacks Ranks, these stocks may be better selections at this time.
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