Even with a name change, this stock remains one of the best-known companies in the field of healthy living.
Although it has been in business for more than 50 years, the company has spurred its growth with a number of initiatives in the past few years. Promoted by high-profile celebrities, it has introduced a new diet program and increased its online presence, which helps attract more young consumers. In the meantime, the stock trades at a very reasonable level to future earnings.
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WW INTERNATIONAL (Nasdaq symbol WTW; www.ww.com)is the new name of Weight Watchers International. The company’s brand name is now just “WW,” with the tagline “Wellness that works.” WW has also moved its stock listing to the tech-heavy Nasdaq exchange from New York.
This is just the latest in a number of changes the 55-year-old company has introduced over the last couple of years: eliminating artificial ingredients from the food it sells to customers; and enlisting Oprah Winfrey as both a brand ambassador and investor.
The name change and “Wellness that works” is meant to reflect the company’s goal of promoting healthy living in general rather than just weight loss.
Just as important, WW continues to strengthen its online presence. That digital expansion, including mobile apps, should let it attract younger clients and extend its global reach.
Weight Watchers continues to increase its membership: the number of active subscribers stood at 4.6 million on March 31, 2018. That’s a 28.6% rise from 3.6 million a year earlier.
Growth Stocks: Company launches Internet meal kits with WW Healthy Kitchen
Media mogul Oprah Winfrey, who owns 10% of the company’s shares, has appeared in advertisements for Weight Watchers since late 2015. She has also used social media to share her own experiences on its lifestyle programs.
Winfrey is particularly effective in reaching the company’s traditional customer base—middle-aged women. However, a big growth area for Weight Watchers is younger consumers who are much more interested in using online apps to access its services.
To address this market, Mindy Grossman, the company’s CEO since July 2017, has successfully updated Weight Watchers’ diet program and boosted its digital presence. The company has also added a prominent youth-oriented “social media ambassador”—music personality DJ Khaled.
In the line with the diet program, the company has launched a service called WW Healthy Kitchen. Customers will order ready-to-cook meal kits over the Internet, which are then delivered to their homes. The company will also sell those meals in grocery stores.
In addition to that prepared food, Weight Watchers will also team up with Gibson Overseas, Inc. to develop a new line of storage containers, cutlery and pans under the WW Healthy Kitchen brand.
Meal kits are a crowded segment, with big competitors like Amazon.com/Whole Foods entering the market. However, the service lets Weight Watchers deepen its relationship with its clients and will help improve success for many of those dieters.
The stock is expected to earn $2.92 in fiscal year 2018 and trades at a very reasonable 16.9 times that forecast.
Recommendation in Stock Pickers Digest: WW International is a buy for aggressive investors.
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