Weight Watchers International (NYSE:WTW) vs. NutriSystem (NTRI) Critical Analysis

Weight Watchers International (NYSE: WTW) and NutriSystem (NASDAQ:NTRI) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, institutional ownership, valuation, dividends, earnings and profitabiliy.

Risk & Volatility

Weight Watchers International has a beta of 3.05, indicating that its stock price is 205% more volatile than the S&P 500. Comparatively, NutriSystem has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500.

Dividends

NutriSystem pays an annual dividend of $0.70 per share and has a dividend yield of 1.2%. Weight Watchers International does not pay a dividend. NutriSystem pays out 51.9% of its earnings in the form of a dividend.

Profitability

This table compares Weight Watchers International and NutriSystem’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Weight Watchers International	7.51%	-6.30%	6.06%
NutriSystem	6.78%	44.63%	26.10%

Earnings and Valuation

This table compares Weight Watchers International and NutriSystem’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Weight Watchers International	$1.19 billion	2.03	$270.11 million	$1.35	27.91
NutriSystem	$596.02 million	2.94	$74.32 million	$1.35	43.85

Weight Watchers International has higher revenue and earnings than NutriSystem. Weight Watchers International is trading at a lower price-to-earnings ratio than NutriSystem, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

86.4% of Weight Watchers International shares are held by institutional investors. Comparatively, 92.5% of NutriSystem shares are held by institutional investors. 15.8% of Weight Watchers International shares are held by company insiders. Comparatively, 2.4% of NutriSystem shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and target prices for Weight Watchers International and NutriSystem, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Weight Watchers International	1	1	0	0	1.50
NutriSystem	0	3	6	0	2.67

Weight Watchers International presently has a consensus target price of $23.00, suggesting a potential downside of 38.96%. NutriSystem has a consensus target price of $56.22, suggesting a potential downside of 5.03%. Given NutriSystem’s stronger consensus rating and higher possible upside, analysts clearly believe NutriSystem is more favorable than Weight Watchers International.

Summary

NutriSystem beats Weight Watchers International on 9 of the 16 factors compared between the two stocks.

About Weight Watchers International

Weight Watchers International, Inc. is a provider of weight management services. The Company operates globally through a network of Company-owned and franchise operations. The Company’s branded products and services include meetings conducted by its franchisees, digital weight management products provided through its Websites, mobile sites and applications, products sold at meetings, licensed products sold in retail channels and magazine subscriptions and other publications. It operates through four segments: North America, United Kingdom, Continental Europe (CE) and Other. It sells a range of products, including bars, snacks, cookbooks, food and restaurant guides with SmartPoints values, Weight Watchers magazines, SmartPoints calculators and fitness kits, and certain third-party products, such as activity-tracking monitors. It sells its products through its meetings business, online and to its franchisees. It includes a range of nutritional, activity, behavioral and lifestyle tools.

About NutriSystem

Nutrisystem, Inc. is a provider of weight management products and services, including nutritionally balanced weight loss programs, multi-day kits available at retail locations and digital tools to support weight loss. The Company’s program customers purchase monthly food packages containing four-week meal plan consisting supply of breakfasts, lunches, dinners and snacks and flex meal plan recipes, which they supplement with fresh fruits, vegetables and dairy. Its customers order on an auto-delivery basis (Auto-Delivery), where means it sends a four-week meal plan on an ongoing basis until notified of a customer’s cancellation. The Company offers its pre-selected favorites food pack or personalized plans, where customers can hand pick their entire menu or customize plans to their dietary preference. As of December 31, 2016, its meal plans featured over 150 menu options at different price points, including frozen and ready-to-go entrees, desserts, snacks and shakes.