Weight Watchers International, Inc. (NYSE:WTW)
Shares of Weight Watchers International, Inc. (NYSE:WTW) were rising ahead of the release of the company’s Q4 2016 earnings results and continued to rise after the company posted earnings that surpassed expectations.
The gains in Weight Watchers’ stock ahead of the earnings were largely a result of investors anticipating positive outcome from the company’s Q4 2016 after its rival NutriSystem Inc.(NASDAQ:NTRI) posted Q4 results that topped the consensus estimates.
Nutrisystem’s Q4 revenue of $108.9 million rose 21% year-over-year, while EPS of $0.29 increased 123%. Analysts on the average were looking for the company to post EPS of $0.22 on revenue of $100 million.
When its turn to report came, Weight Watchers International, Inc. (NYSE:WTW) largely lived up to market expectations. It posted EPS of $0.20, significantly up from EPS loss of $0.03 a year earlier and above the consensus estimate of $0.18. However, while revenue of $267 million rose from $259.2 million in the year-ago quarter, the figure came short of consensus estimate that called for revenue of at least $274 million.
“We delivered positive member recruitment growth in every quarter of 2016, ending the year with 10 percent more subscribers than the prior year,” said CFO Nick Hotchkin.
The Oprah Winfrey effect
Weight Watchers International, Inc. (NYSE:WTW) has recently benefited from the appearance of billionaire Oprah Winfrey in its commercials, boosting its subscriber recruitment and driving sales. Winfrey is a major shareholder in Weight Watchers.
Shutting of unprofitable arm
In what seems as part of the efforts to reduce cash burn and save more money to reinvest to distribute to shareholders, Weight Watchers announced ending operations of its Spanish subsidiary called Entulinea, saying it has been difficult to bring the business to profitability.
After posting largely positive results for 4Q2016, Weight Watchers International, Inc. (NYSE:WTW) issued strong earnings guidance for fiscal 2017. The company is expecting EPS in the range of $1.30 – $1.40. Consensus estimate calls for revenue of $1.17. For fiscal 2016, Weight Watchers posted revenue of $1.2 billion and EPS of $1.03.
Weight Watchers’ rival Nutrisystem guided 2017 revenue in the range of $630 – $650 million and EPS in the band of $1.55 – $1.65. The company reported revenue of $546 million and EPS of $1.19 in 2016.
Shares of Weight Watchers International, Inc. (NYSE:WTW) rose more than 9.9% to $14.39 in the regulator session on Tuesday, and rose a further 10.5% in extended trading after reporting Q4 2016. The stock has gained more than 25% year-to-date, and is up more than 30% over the last 12 months.
|Last Price a/o, 4:02PM EST||$ 14.39|
|Average Volume (mlns)||1.84|
|Market Cap (mlns)||$ 933.62|
|Shares Outstanding (mlns)||64.88|
|Share Float (mlns)||27.39|
|Short Interest Ratio||10.1|
I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.
About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.