Why Weight Watchers International, Inc. Popped Today

By Bradley Seth McNewMarketsFool.com

Image source:Weight Watchers International

Continue Reading Below

What happened

Shares ofWeight Watchers International, Inc.(NYSE: WTW) rose nearly 15% as of 11:30 a.m EST today, not because of surprise earnings or a new business partnership that could drive earnings, but because Oprah -- one of Weight Watchers' most famous spokespeople and investors -- revealed in a new commercial that she has lost more than 40 lbs. using the Weight Watchers plan.

So what

More From Fool.com

Weight Watchers' updated weight-loss program, which the company says leads to 15% more weight lossin the first two months than the company's earlier program, launched a new commercialfeaturing Oprah. In the commercial, the billionaire personality and business mogul tells viewers that if they are thinking of trying Weight Watchers, they just need to "take the leap" and start the new program. "I can honestly tell you, I struggle no more," Oprah says in the ad.

Oprah first teamed up with Weight Watchers in late 2015, when she took a 10% stake in the company for $43 million. Oprah has since been a company cheerleader and advisor, and today, she has helped to make the company and herself a little richer. Long term, though, the company may still face some serious challenges.

Now what

Weight Watchers has had a volatile last few years. The company made an impressive run through March 2012, up to around $80 per share, though the stock plummeted the next three years down to just 5% of that value by June 2015. Oprah has been able to boost the stock a few times in her short tenure there. Shares spiked in 2015, when Oprah announced her new role and position in the company, and again when she announced some weight loss success in January. Even following today's bump, though, the stock is down nearly 50% year to date.

Weight Watchers posted a relatively solid most recent quarter, with revenue and EPS up 2.7% and 38%, respectively, year over year. Still, much of that earnings success was due to a tax issue that allowed the company to pay just 10% tax for the quarter, and Wall Street hasn't been convinced the company will be able to overcome some of its challenges to continue growing earnings going forward.

Congratulations to Oprah on her success, but until Weight Watchers can start to show consistent growth under its new program -- and take care of hurdles such as completing their search for a CEO -- it might be best to push yourself away from the table on this one.

10 stocks we like better than Weight Watchers International When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now...and Weight Watchers International wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of Nov. 7, 2016.

Seth McNew has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.