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Weight Watchers International (WTW) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
Morgan Stanley (MS) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Weight Watchers International (WTW) closed the most recent trading day at $28.78, moving +0.49% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.07%. Meanwhile, the Dow lost 0.21%, and the Nasdaq, a tech-heavy index, added 0.13%.

Heading into today, shares of the weight-loss program operator had lost 18.36% over the past month, lagging the Consumer Discretionary sector's gain of 4.92% and the S&P 500's gain of 5.36% in that time.

WTW will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.61, up 64.86% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $349.01 million, up 11.68% from the year-ago period.

Any recent changes to analyst estimates for WTW should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 1.91% lower. WTW currently has a Zacks Rank of #4 (Sell).

Looking at its valuation, WTW is holding a Forward P/E ratio of 8.1. For comparison, its industry has an average Forward P/E of 11.82, which means WTW is trading at a discount to the group.

We can also see that WTW currently has a PEG ratio of 0.3. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. WTW's industry had an average PEG ratio of 1.27 as of yesterday's close.

The Consumer Services - Miscellaneous industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 107, which puts it in the top 42% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow WTW in the coming trading sessions, be sure to utilize Zacks.com.


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