Weight Watchers International, Inc. (NYSE:WTW) is gaining north of 15% Thursday morning after Oprah Winfrey disclosed she had lost 40 pounds using Weight Watchers.
Winfrey announced her weight loss via two new ad spots for WTW:
“Since I’ve started Weight Watchers, I’ve lost over 40 pounds. I can honestly tell you, I struggle no more.”
According to Winfrey, she’s still chowing down on her favorite foods and exalts of the program’s ability to allow her to live a “full life.”
“I’m eating everything I love — tacos, pasta. I’ve never felt deprived,” said Winfrey. According to a press release sent to People, Winfrey believes WTW isn’t just a diet, but a lifestyle:
“Weight Watchers is easier than any other program I’ve ever been on. It’s a lifestyle, a way of eating and a way of living that’s so freeing. You never feel like you are on a diet and it works. I would say to anyone who’s thinking of joining Weight Watchers: Take the leap. And get about the business of enjoying a fantastic and full life.”
The media mogul is a spokesperson for the company, but she’s also a huge shareholder in WTW stock. In fact, she owns around 10% of WTW stock and sits on the board. Her influence as a celebrity, however, has been called into question.
While there’s no denying Winfrey’s ability to move WTW stock through sheer influence, it’s a different matter altogether to drum up business. Quarter over quarter, Weight Watchers revenue is down nearly 10%. It’s a slide that has been happening for years: In 2011, WTW posted revenue of $1.8 billion, and that has since fallen to last year’s $1.16 billion. And things haven’t looked up in the trailing twelve months, with revenues coming in around $1.15 billion.
Operating income, too, has been especially dastardly. Where WTW once posted $546 million in 2011, it’s now running around 170 million for the past year. Ouch. And per-share earnings have fallen from $4.16 five years ago to 63 cents now in the trailing twelve months.
With Oprah on board, however, WTW stock is expected to grow earnings by 733% this quarter and 15% long term. So with WTW well below the days where it traded hands for $80 a pop, it could be a value if earnings actually perk up over the long haul.
At any rate, traders who get in and get out at the right times are enjoying these Oprah-related pops, but who can time that with any consistency?
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
