Weight Watchers International Misses Where it Counts

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Weight Watchers International (NYS: WTW) reported earnings on May 2. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Weight Watchers International met expectations on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue was unchanged and GAAP earnings per share shrank significantly.


Gross margins expanded, operating margins contracted, net margins contracted.

Revenue details
Weight Watchers International booked revenue of $503.5 million. The seven analysts polled by S&P Capital IQ anticipated net sales of $505.8 million on the same basis. GAAP reported sales were 0.0% higher than the prior-year quarter's $503.4 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.75. The seven earnings estimates compiled by S&P Capital IQ averaged $0.78 per share. GAAP EPS of $0.74 for Q1 were 26% lower than the prior-year quarter's $1.00 per share.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 57.3%, 110 basis points better than the prior-year quarter. Operating margin was 20.4%, 660 basis points worse than the prior-year quarter. Net margin was 10.8%, 380 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $501.6 million. On the bottom line, the average EPS estimate is $1.39.

Next year's average estimate for revenue is $1.90 billion. The average EPS estimate is $4.70.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 181 members out of 217 rating the stock outperform, and 36 members rating it underperform. Among 63 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 56 give Weight Watchers International a green thumbs-up, and seven give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Weight Watchers International is hold, with an average price target of $83.22.

At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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