Why Weight Watchers Gained

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of weight-management specialist Weight Watchers International (NYS: WTW) surged 18% today after its quarterly results easily topped Wall Street expectations.

So what: Weight Watchers shares have slumped in 2012 on weak demand for its services, but a wide third-quarter beat -- EPS of $1.20 on revenue of $430.6 million versus the consensus of $1.05 and $423 million -- naturally eases some of those concerns. While softness in North America and the U.K. continue to weigh heavily on its in-person meetings, strong online subscription growth -- active subscribers jumped nearly 20% to 2.05 million during the quarter -- is triggering plenty of optimism over its prospects going forward.

Now what: Management now sees 2012 EPS of $4.00-$4.10, versus its prior view of $4.00-$4.20 and Wall Street's estimate of $4.11. "Our recent decision to accelerate a few investment areas in preparation for 2013, as well as Hurricane Sandy, will impact our Q4 2012 results," said CEO David Kirchhoff. "Therefore, we are narrowing our fiscal 2012 earnings guidance." Of course, with the stock still well off its 52-week highs and trading at a PEG ratio of around 1, Weight Watchers remains a tempting long-term opportunity.

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The article Why Weight Watchers Gained originally appeared on Fool.com.

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