Personal Finance

Why Weight Watchers International, Inc. Popped Again Today

Image source: Weight Watchers International.

What happened

Shares of Weight Watchers International, Inc. (NYSE: WTW) rose more than 19% as of 11 a.m EST today following an announcement that the company's weight-loss program won multiple first-place designations in the 2017 Best Diets rankings by U.S. News & World Report .

So what

Weight Watchers says that it has earned the first-place spot in four categories including "Best Diet for Fast Weight Loss," "Best Diet for Weight Loss," "Best Commercial Diet," and "Easiest Diet to Follow." In a release about the news, Weight Watchers management said that "since the Best Diets rankings were introduced in 2010, Weight Watchers has continued to innovate, addressing the evolving needs, mindsets and science around weight management." It says its updated weight-loss program leads to 15% more weight loss in the first two months than the company's earlier program.

Today's pop follows a similar rise on Dec. 22 when television star Oprah -- one of Weight Watchers' most famous spokespeople and investors -- revealed in a commercial for Weight Watchers' new campaign that she has lost more than 40 lbs. using the updated Weight Watchers regimen. The commercial featuring Oprah follows the iconic celebrity teaming up with Weight Watchers in late 2015, when she took a 10% stake in the company for $43 million.

Weight Watchers spokesperson and investor Oprah. Image source: Weight Watchers.

Now what

After the company made an impressive run through March 2012, up to around $80 per share, the stock later plummeted over the next three years down to just 5% of that value by June 2015. Thanks to a few shrewd moves and good early results for the new program, the stock has done well recently, but it's still down more than 37% over the last year.

In its most recent quarter, Weight Watchers posted revenue and earnings per share up 2.7% and 38%, respectively, year over year (though much of that earnings success was due to a tax issue that allowed the company to pay just 10% tax for the quarter). Still, it faces new hurdles ahead such as completing its current search for a new CEO, competing against a plethora of free or low-cost fitness and weight management mobile app programs, and most of all -- proving that it's updated system will draw in enough new customers to keep earnings growth going.

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Seth McNew has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

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

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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