Analysts are enthusiastic after the company released a better-than-expected earnings report.
It’s been a rocky year for weight-loss company Weight Watchers. The company’s shares are down more than 60% from a year earlier as it struggles to hang onto its subscriber base.
But the company finally received a boost on Wednesday after releasing its second-quarter earnings report. The Weight Watchers earnings report may be the definition of ‘under-promise, over-deliver.’
The company’s earnings are down from where they were a year earlier, and revenue fell short of analyst expectations. But it was better than Wall Street was expecting, especially given the company’s weak 2019 guidance.
3 Things to Know About the Weight Watchers Earnings Report
Weight Watchers has struggled to change its perception with consumers over the past year. Many Americans are no longer interested in dieting so the company’s attempted to rebrand itself as a wellness company.
The second-quarter earnings report is the first real indicator that the company’s attempts are working. Here are three things to know about the earnings report:
Revenue and earnings still fell short: During the second quarter, the company’s earnings were 78 cents per share. Granted, this is still down 24% from a year earlier, but it beat analyst expectations of 64 cents per share.
And the company’s net sales fell 10% during the second quarter to hit $369 million. This was short of Wall Street’s guidance of $376.1 million.
The company boosted its subscriber base: During the second quarter, Weight Watchers was finally able to increase its subscriber base. Subscribers reached 4.6 million, which is up from 4.5 million during the previous quarter. This is the largest number of subscribers the company has seen during the second quarter.
Weight Watchers raised its full-year guidance: The company also adjusted its full-year guidance. It now expects adjusted earnings to reach $1.55 to $1.70 per share, instead of $1.52 like investors were expecting.
Final Thoughts
All in all, Weight Watchers is on track to have its best day since Oprah announced she was joining the company’s board of directors in 2015. And analysts seemed positive about the direction the company is headed in. A D.A. Davidson analyst reiterated a buy rating on the stock.
But CEO Mindy Grossman was quick to point out that this turnaround is a team effort. Grossman said the momentum was due not just to Winfrey but to the entire team and the company’s marketing and digital efforts.
