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Weight Watchers reports Q2 results August 6

What's Happening

Weight Watchers ( WTW ) has enjoyed a breakout year in 2018, with shares appreciating a massive 91.5% year to date. The company will report its second-quarter numbers of August 6, with the consensus calling for earnings of $0.90 per share, up from $0.67 during the same period last year. WTW reports after the market close.

Technical Analysis

WTW was recently trading at $91.58 down $14.15 from its 12-month high and $59.03 above its 12-month low. InvestorsObserver's Stock Score Report gives WTW an 87 long-term technical score and an 85 short-term technical score. The stock has recent support above $85 and recent resistance below $94. All 7 analysts who cover the stock give it a Strong Buy rating. WTW gets a score of 88 from InvestorsObserver's Stock Score Report.

Analyst's Thoughts

A primary reason why WTW showed so much strength at the start of the year was a rumor that the face of the company, Oprah Winfrey was considering making a run in the next presidential election against President Trump. Winfrey has repeatedly denied any intention to run for the nation's highest office, but that has not kept WTW from building on its gains through the year, and the stock is currently trading in the upper end of its 52-week range. The company has managed to turn things around in recent years, and analysts see a lot of growth moving forward. While earnings fell by an average 12.6% per annum over the last five years, profits are forecast to rise 77% this year, and by an average 39.7% over the next five years. The company has topped estimates on both the top and bottom line the last five quarters, and if it is able to extend that streak the stock could easily rise and hit a new record high following the report.

Stock Only Trade

If you're looking to establish a long stock position in WTW consider buying the stock under $91. Sell if it falls below $84.25 or take profits if it gets to $104.50.

Bullish Trade

If you want a bullish hedged trade on the stock, consider a 9/21/18 65/70 bull-put credit spread for a $0.30 credit. That's a potential 6.4% return (47.5% annualized*) and the stock would have to fall 23.6% to cause a problem.

Bearish Trade

If you want to take a bearish stance on the stock at this time, consider an 9/21/18 110/115 bear-call credit spread for a $0.45 credit. That's a potential 9.9% return (73.7% annualized*) and the stock would have to rise 21.0% to cause a problem.

Covered Call Trade

If you like the stock but wish to lower your cost basis on a new position, you may want to consider a 9/21/18 $90 covered call. Buy WTW shares (typically 100 shares, scale as appropriate), while selling the 9/21/18 $90 call for a debit of $83.58, per share. The trade has a target assigned return of 7.7%, and a target annualized return of 57.2% (for comparison purposes only).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Originally published on InvestorsObserver.com


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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