Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Why Did Weight Watchers Stock Gain 15% in February?

Weight Watchers (NYSE: WTW  ) has turned its business around. That took more than Oprah Winfrey buying a 10% stake in the company and joining its board, but the media mogul and former talk show host deserves much of the credit.

WTW Chart

Image source: YCharts.

What happened

Winfrey was not the instant fix many people expected her to be, but her presence has helped over time. Recently, the weigh- loss company has received a lot of positive publicity from commercials starring the onetime talk show host. That has helped Weight Watchers deliver solid gains in membership, which sent its stock price soaring after it reported fourth-quarter results.

The company finished Q4 up around 10% in both subscribers and paid weeks compared to the same quarter in the previous year. .It also reported that revenues had risen 5% during the fourth quarter versus the same period in 2016. That was enough to send its stock, which closed January at $12.45 to a February close of $14.39, a 15% increase, according to data provided by S&P Global Market Intelligence.

A scale with an apple and a tape measure on top of it.

Weight Watchers helps members lose weight. Image source: Pixabay.

So what

The company's stock spiked on the earnings release because the numbers verified that the publicity generated by Winfrey's commercials and media interviews had worked. Weight Watchers uses a subscription model, and the Q4 and full-year results showed that the extra attention driven by its celebrity board member has added subscribers.

"We delivered positive member recruitment growth in every quarter of 2016, ending the year with 10% more subscribers than the prior year," said CFO Nick Hotchkin. "So far in 2017 our global marketing campaigns are driving strong member recruitment and interest in our Beyond the Scale program. With the year off to a good start, we are confident we will deliver revenue growth and higher profitability throughout the year."

Now what

Going forward, Weight Watchers has to show that it can hold onto the members Winfrey brings. Those trends looked good in 2016, and they should continue into 2017, but retention will be as big a factor as adding new members going forward. Clearly, the company believes that will happen as it's predicting earnings per share will rise from $1.03 in 2016 to between $1.30 and $1.40 in 2017.

Weight Watchers has shown that it can right its ship and return to growth and that it has a viable business model for the future. In 2017, shares should continue to rise if it can continue to deliver its message of sensible weight loss while leveraging Winfrey's fame and personal stories.

10 stocks we like better than Weight Watchers International
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Weight Watchers International wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of February 6, 2017

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 4008085, ~/Articles/ArticleHandler.aspx, 3/27/2017 2:25:19 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
Change down DOW 20549.8 -46.9 -0.2%
Change down S&P 500 2338.7 -5.3 -0.2%
Change up NASD 5836.6 7.9 0.1%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

3/27/2017 2:09 PM
WTW $15.11 Up +0.18 +1.17%
Weight Watchers In… CAPS Rating: **