WW - Embedded Expectations Analysis - 2021 09 14
WW International, Inc. (WW:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 13.5x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and although management'sconcerns about weight loss demand, Consumer Product sales growth, and myWW suggest the potential for near-term headwinds, given the benefits of the firm's digital transition, equity upside may be warranted for WW.Specifically, management may lack confidence in their ability to improve Total Consumer Product sales growth, drive retention through greater customer engagement, and target a younger audience with Digital 360. Additionally, they may be concerned about a slowdown in weight loss demand and lower workshop subscribers due to the pandemic, and they may be overstating the potential of their upcoming 2022 food program to offer individualized plans for people with diabetes. Furthermore, they may lack confidence in their ability to execute cost management initiatives, meet their adjusted operating income outlook, and optimize performance in H2 2021. Moreover, management may be overstating the pent-up demand for in-person coach and community wellness offerings, growth opportunities in
e-commerce, and the strength of their high-margin digital subscription model. Finally,
they may also lack confidence in their ability to amplify the launch of myWW and advance their data science and analytics capabilities to instill a driven culture across the business.
Although management's concerns about weight loss demand, sales growth, and the launch of myWW suggest the potential for near-term headwinds, given the benefits of the firm's digital transition, market expectations are overly bearish and equity outperformance is likely for WW.
WW International is a wellness company and provider of commercial weight management program. The company's Weight Management Program and Plan is comprised of a range of nutritional, activity, behavioral and lifestyle tools and approaches, and includes its food plan, known as SmartPoints. The company's services and products include digital offerings provided through its websites, mobile sites and apps, workshops conducted by the company and its franchisees, consumer products sold direct to consumers, licensed and endorsed products sold in retail channels, and publications. The company provides subscriptions for its digital products and for itsworkshops.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.