Weight Watchers (WTW) stock is aiming to continue its impressive run when it reports Q2 earnings after the close Monday. The addition of Hollywood director Kevin Smith as a brand ambassador as he attempts to shed pounds following a heart attack has been predicted to help the brand appeal to more people than ever before.
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Estimates: Wall Street expects EPS to swell 34% to 90 cents, according to Zacks Investment Research. Revenue is seen ballooning 20% to $412 million.
Results & Outlook: Check back after the close.
Stock: The company's shares were up 0.8% at 92.27 on the stock market today. It is trying to move above its 50-day line, a key technical benchmark. Weight Watchers stock is nearing its profit-taking zone after breaking out from a 12-week consolidation on May 14, MarketSmith analysis shows. Its stock price is up 108% so far in 2018.
While users' waistlines have been shrinking, Weight Watchers revenue have been expanding. The firm has enjoyed accelerating sales growth for the past five quarters. Reflected strong fundamentals, the stock currently has a very good, but not ideal, IBD Composite Rating of 94.
B. Riley FBR senior analyst Kara Anderson believes Hollywood director Kevin Smith's embrace of Weight Watchers has given the stock a popular culture boost.
"Following Kevin Smith's heart attack in February he became a brand ambassador, and shortly thereafter began chronicling his wellness journey," Anderson said in a pre-earnings research note. "Smith's 2.7 million Facebook followers and 1.3 million Instagram followers have seen him shed more than 40 pounds, with him attributing his success to Weight Watchers and the program's ability to make it easy for him to lose and maintain his weight."
She believes the addition of new brand ambassadors including Smith, chef Eric Greenspan, French singer Hélène Ségara, and DJ Khaled have helped the company reach a new, diverse demographic. This adds to the star power offered by its biggest endorser, Oprah Winfrey.
Weight Watchers Promotes Wellness
Innovative services and products to target holistic wellness — rather than mere weight loss — have also been cited as a reason for Weight Watchers success.
"Consumers are looking at healthy lifestyles, mental well-being," Morningstar analyst R.J. Hottovy said. "Once upon a time, weight management was all about what you ate. Now any activity can be translated into Weight Watchers points."
Technology has been critical to the transition. Using fitness tracking devices, Weight Watchers members can earn FitPoints for activities such as walking, cleaning or dancing. FitPoints are then traded for SmartPoints, which determine a member's daily diet allowances. The program aims to shift the focus from calorie counting to eating leaner proteins, fruits and vegetables. Members can track points right on their wrists.
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