WeightWatchers (WW)

Personal wellness company WeightWatchers (NASDAQ:WW) reported Q3 CY2025 results exceeding the market’s revenue expectations, but sales fell by 10.8% year on year to $172.1 million. The company’s full-year revenue guidance of $697.5 million at the midpoint came in 0.8% above analysts’ estimates. Its GAAP loss of $5.76 per share was significantly below analysts’ consensus estimates.

Company Overview

Known by many for its old cable television commercials, WeightWatchers (NASDAQ:WW) is a wellness company offering a range of products and services promoting weight loss and healthy habits.

Some consumer discretionary companies don’t fall neatly into a category because their products or services are unique. Although their offerings may be niche, these companies have often found more efficient or technology-enabled ways of doing or selling something that has existed for a while. Technology can be a double-edged sword, though, as it may lower the barriers to entry for new competitors and allow them to do serve customers better.

WeightWatchers's fitness and wellness peers include BODi (NYSE:BODY), MyFitnessPal, Noom, Cult.fit, and Trainerize.

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. WeightWatchers struggled to consistently generate demand over the last five years as its sales dropped at a 12% annual rate. This was below our standards and is a sign of lacking business quality.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. WeightWatchers’s annualized revenue declines of 10.1% over the last two years suggest its demand continued shrinking.

This quarter, WeightWatchers’s revenue fell by 10.8% year on year to $172.1 million but beat Wall Street’s estimates by 6.6%.

Looking ahead, sell-side analysts expect revenue to decline by 13.6% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will face some demand challenges.

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

WeightWatchers’s operating margin has been trending up over the last 12 months and averaged 11.7% over the last two years. Its profitability was higher than the broader consumer discretionary sector, showing it did a decent job managing its expenses.

This quarter, WeightWatchers generated an operating margin profit margin of 4.7%, down 14 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

WeightWatchers’s EPS grew at an astounding 45.1% compounded annual growth rate over the last five years, higher than its 12% annualized revenue declines. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

In Q3, WeightWatchers reported EPS of negative $5.76, down from negative $0.58 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects WeightWatchers’s full-year EPS of $8.44 to shrink by 81.1%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

While WeightWatchers posted positive free cash flow this quarter, the broader story hasn’t been so clean. Over the last two years, WeightWatchers’s demanding reinvestments to stay relevant have drained its resources, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 2.1%, meaning it lit $2.12 of cash on fire for every $100 in revenue.

WeightWatchers’s free cash flow clocked in at $4.73 million in Q3, equivalent to a 2.8% margin. The company’s cash profitability regressed as it was 5.9 percentage points lower than in the same quarter last year, but it’s still above its two-year average. We wouldn’t read too much into this quarter’s decline because investment needs can be seasonal, leading to short-term swings. Long-term trends trump temporary fluctuations.

Looking forward, analysts predict WeightWatchers will generate cash on a full-year basis. Their consensus estimates imply its free cash flow margin of negative 1.9% for the last 12 months will increase to positive 9.3%, giving it more money to invest.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Although WeightWatchers hasn’t been the highest-quality company lately because of its poor top-line performance, it found a few growth initiatives in the past that worked out wonderfully. Its five-year average ROIC was 36.1%, splendid for a consumer discretionary business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, WeightWatchers’s ROIC has increased significantly. This is a good sign, and we hope the company can keep improving.

WeightWatchers reported $177.6 million of cash and $468.9 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $142.7 million of EBITDA over the last 12 months, we view WeightWatchers’s 2.0× net-debt-to-EBITDA ratio as safe. We also see its $54.57 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly WeightWatchers blew past analysts’ EBITDA expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. On the other hand, its EPS missed. Overall, this print had some key positives. The stock traded up 5.5% to $35.01 immediately after reporting.

Updated: November 6, 2025 at 7:54 AM EST

Are you wondering whether to buy WeightWatchers or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

WeightWatchers isn’t a terrible business, but it doesn’t pass our bar. To kick things off, its revenue has declined over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its stellar ROIC suggests it has been a well-run company historically, the downside is its number of members has disappointed. On top of that, its projected EPS for the next year is lacking.

WeightWatchers’s P/E ratio based on the next 12 months is 15.2x. While this valuation is fair, the upside isn’t great compared to the potential downside. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $48.33 on the company (compared to the current share price of $35.01).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.