WW International, Inc. (NASDAQ:WW), formerly known as Weight Watchers, reports earnings after the market closes today. Given the stock's explosive post-earnings history, now is the time to peel back the curtain on WW's technical and fundamental profile, knowing full well that the outlook could be drastically different in 24 hours.
WW International stock is up 26% in 2021, but has spent the last month trading in a tight range between $30-$31. On the lower rung of this consolidation is WW's 200-day moving average, a trendline that's only been breached twice on a closing basis since February. Despite the solid gains this year, 60% of analysts rate the stock a tepid "hold."
Now about this post-earnings history. WW averages a post-earnings move of 16.1% in the last eight quarters, regardless of direction. This includes a 25.9% post-earnings bull gap back in May, as well as an 8% drop in August 2020. For Wednesday's trading, the options marker is pricing in a larger-than-usual post-earnings move of 19.1%.
Over the past couple of years, WW International has seen a constant revenue and net income decline. The weight loss company's revenues have fallen 14% and its net income has decreased a massive 68% since fiscal 2018. In addition, WW's balance sheet carries $1.6 billion in total debt and only $113.3 million in cash.
It is difficult to make an argument in favor of WW International’s fundamentals, especially with Weight Watchers stock’s high price-earnings ratio of 33.91. However, WW does have a forward price-earnings ratio of 17.15, which does offer some hope for it as a long-term investment. Nonetheless, the reward potential simply is not enough to justify the risk involved with WW International stock.