| Stock (Symbol) | Stock Price | |
Weight Watchers (WTW) |
$60 |
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| Data is as of | Expected to Report | Sector |
February 17, 2011 |
Apr 21 |
Retail & Restaurant |
| Sharek’s Take | ||
 Weight Watchers is on fire because of its online initiative and Points Plus program. Online generates around 15% of revenue but around 25% of sales — and this business could grow 40-50% in 2011. Points Plus is an improved Points program, which assigns points to certain foods. Points Plus is better because it is adjusted to give more points for bad foods like carbs and alcohol (wine is up from 2 to 4 points) and less points for good foods (an apple is now zero points). The big news with this stock is that the company just upped 2011 annual estimates from $2.77 to $3.85 — which would be 50% profit growth for the year. This stock is very timely.
WTW has pristine financials and pays a dividend — this is a safe company. Today I looked at each annual report and there were no restatements of earnings for any year. I felt very comfortable with this stock after reading. |
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| One-Year Chart | ||
 Weight Watchers jumped higher after results from last quarter, but with a P/E of 16 the stock is still buyable. Notice 2010 wasn’t a good year for profit growth (note the red along the bottom) so growth money managers didn’t own this stock. Estimates (bottom right) now look sensational so money should be flowing into this stock. |
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| Earnings Table | ||
 WTW had profit growth of 16% last quarter, which was merely good. Sales rose 14%. North American sales rose 16% and online sales increased 31%.The big news was in the estimate changes. The company beat by 10 cents last quarter and this is a significant event because the company had been coming in around what estimates were. The big reason Weight Watchers is a good stock is because profit estimates flew higher than expected. It will be very significant if estimates rise again next quarter — very significant because money managers haven’t pushed this stock up to where it should be. Its as if nobody believes. Another big estimate increase would make them believe.Quarterly estimates look oh-so-solid for the next four quarters. These figures jumped higher. Profits should grow 50% during the next three quarters — nice. |
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| Fair Value | ||
 I remember WTW selling for 20 times earnings when the news wasn’t this good. 21 times earnings is very reasonable to ask for and gives the stock solid upside by next year. These fair values could rise if estimates do. |
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| Ten-Year Chart | ||
 WTW has a good history of growing profits, but it hasn’t been perfect as sometimes the company has down years. Right now the economy is growing and the environment is good for this company. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
10 of 22 |
Weight Watchers is ranked 10th in the 22 stock Growth Portfolio Power Rankings. I love WTW but the stock has stalled around $60. If WTW moves higher I’ll like it more.
WTW is ranked 6th of 10 stocks in the Aggressive Growth Portfolio. The huge increases in profit estimates make this stock very timely for this portfolio. |
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Aggressive Growth Portfolio
6 of 10 |
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