What To Expect From WW International’s Q3 Results?

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WW International (NASDAQ:WW)  is poised to report its Q3 2022 results on November 3. We expect earnings to come in at about $0.37 per share, slightly ahead of consensus estimates of $0.36 although this would mark a significant decline from Q3 2021 when earnings stood at almost $0.65 per share. We project that revenue will stand at about $254 million, down by about 13% versus the last year, although it would be roughly in line with consensus estimates. So what are some of the key trends that are likely to drive results? See our interactive dashboard analysis on WW International Earnings Preview for more details on how WW’s revenues and earnings are likely to trend for the quarter.

WW’s business has been facing considerable headwinds in recent quarters as the big health and fitness focus seen through the Covid-19 lockdowns has cooled off. Moreover, mounting competition from a slew of new-age, AI-driven weight management applications and independent experts on social media, also appears to be impacting the nearly six-decade-old weight loss player. The company’s digital business – which investors had been counting on to drive long-term growth – has seen its subscriber base trend lower. Total digital subscribers fell by 17% year-over-year to 3.1 million in Q2 and the trend is likely to continue through Q3, as well. That said, the company’s Studio business, which sees higher per-subscriber billings, should witness a recovery. Over Q2, subscribers for the business grew by about 11% versus last year to 0.8 million. WW has also been looking to build a diabetes-focused business, while also rolling out a program called PersonalPoints, which completely customizes weight loss plans for each member. We will be looking for progress on this front.

Now, WW stock now remains down by about 75% year-to-date and remains down by about over 85% from the highs seen in 2021, trading at under $5 per share. Although the near-term movement of the stock will hinge on Q3 earnings, we think the risk-to-reward position for the stock is much more attractive, given that it trades at just about 0.3x 2022 revenues. See our analysis WW International Valuation: Expensive or Cheap for more details on WW’s valuation and comparison with peers. Check out our analysis on WW International Revenue: How does WW Make Money for an overview of WW’s business model, key revenue streams, and how they have been trending.

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Returns Oct 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 WW Return 11% -73% -62%
 S&P 500 Return 9% -18% 74%
 Trefis Multi-Strategy Portfolio 7% -22% 211%
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[1] Month-to-date and year-to-date as of 10/30/2022
[2] Cumulative total returns since the end of 2016

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