Critical Comparison: Weight Watchers International (WTW) and Graham (GHC)

Graham (NYSE: GHC) and Weight Watchers International (NYSE:WTW) are both mid-cap consumer discretionary companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, profitability, earnings, valuation, analyst recommendations, risk and institutional ownership.

Profitability

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

Net Margins Return on Equity Return on Assets
Graham 4.90% 5.50% 3.07%
Weight Watchers International 9.03% -8.81% 7.94%

Valuation & Earnings

This table compares Graham and Weight Watchers International’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Graham $2.48 billion 1.30 $168.59 million $22.20 26.35
Weight Watchers International $1.16 billion 2.37 $67.69 million $1.68 25.48

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

Insider and Institutional Ownership

69.0% of Graham shares are held by institutional investors. Comparatively, 86.5% of Weight Watchers International shares are held by institutional investors. 22.5% of Graham shares are held by company insiders. Comparatively, 15.8% of Weight Watchers International shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

Graham has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500. Comparatively, Weight Watchers International has a beta of 2.96, suggesting that its stock price is 196% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Graham and Weight Watchers International, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Graham 0 0 0 0 N/A
Weight Watchers International 1 1 1 0 2.00

Weight Watchers International has a consensus target price of $38.67, suggesting a potential downside of 9.66%. Given Weight Watchers International’s higher probable upside, analysts clearly believe Weight Watchers International is more favorable than Graham.

Dividends

Graham pays an annual dividend of $5.08 per share and has a dividend yield of 0.9%. Weight Watchers International does not pay a dividend. Graham pays out 22.9% of its earnings in the form of a dividend.

Summary

Weight Watchers International beats Graham on 9 of the 15 factors compared between the two stocks.

Graham Company Profile

Graham Holdings Company, formerly The Washington Post Company, is a diversified education and media company whose principal operations include educational services, television broadcasting, cable television systems, and online, print and local TV news. The Company owns Kaplan, a provider of educational services to individuals, schools and businesses, serving over one million students annually with operations in more than 30 countries. Its programs include higher education, test preparation, language instruction and professional training. Its Post-Newsweek Stations, Inc owns six television stations which include WDIV-Detroit (NBC), KPRC-Houston (NBC),WPLG-Miami (ABC), WKMG-Orlando (CBS), KSAT-San Antonio (ABC) and WJXT-Jacksonville (independent). The stations also broadcast digital channels focusing on classic television and lifestyle programming, in addition to operating mobile sites and mobile applications delivering breaking news, weather and community news.

Weight Watchers International Company Profile

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.

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