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Factors to Know Ahead of WW International (WW) Q3 Earnings

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WW International, Inc. (WW - Free Report) is scheduled to report third-quarter 2019 numbers on Nov 5, after the market closes. Notably, the company outperformed the Zacks Consensus Estimate in the trailing four quarters, the average positive earnings surprise being 16.1%. In the last reported quarter, it witnessed positive earnings surprise of 20%.

Estimates Look Dull

The Zacks Consensus Estimate for the third quarter is pegged at 67 cents, indicating a decline of 33% from the year-ago period’s reported figure. The consensus mark has been stable over the past 30 days. The consensus mark for revenues is pegged at $356.6 million, suggesting a decline of 2.5% from the year-ago quarter’s reported figure.

Weight Watchers International Inc Price and EPS Surprise


Factors at Play

Soft gross margin has been concerning WW International for a while. However, cost-saving endeavors and higher digital mix have been providing some cushion. On the last earnings call, management had stated that it expects higher inventory reserve as well as preparations for winter launch to dent third-quarter gross margin. Sluggish gross margin along with any deleverage in marketing and G&A expenses is likely to get reflected in the bottom-line number in the quarter.

Additionally, soft online subscriber base in North America remain concerning. Nevertheless, management remains optimistic about overall subscriber trend. In this regard, on the last quarter earnings call, it had estimated subscribers of around 4.3 million for the quarter. Also, the company’s product sales, which remained drab in the first and second quarters, are likely to improve in the second half of 2019 on expanded offerings and enhanced studio attendance. Such upsides might have provided some cushion to the top line in the third quarter.

WW International has been progressing well with its performance marketing approach on all social media platforms, which is likely to have driven traffic in the quarter under review. The company has been making efforts to attract audiences via various digital advertisements, highlighting weight loss success stories, holistic approach toward weight loss and clarifying the myth associated with the same. These endeavors are likely to get reflected in the company’s third-quarter results.

What the Zacks Model Unveils?

Our proven model doesn’t conclusively predict an earnings beat for WW International this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

The company sports a Zacks Rank #1 (Strong Buy) and an Earnings ESP of -2.24%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Lowe’s Companies (LOW - Free Report) currently has an Earnings ESP of +1.25% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target (TGT - Free Report) has an Earnings ESP of +1.79% and a Zacks Rank #3 at present.

Children's Place (PLCE - Free Report) currently has an Earnings ESP of +17.24% and a Zacks Rank #3.

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