Weight Watchers International (NYSE: WTW) and Graham (NYSE:GHC) 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 analyst recommendations, earnings, institutional ownership, dividends, risk, profitability and valuation.

Volatility & Risk

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

Insider and Institutional Ownership

86.5% of Weight Watchers International shares are held by institutional investors. Comparatively, 69.0% of Graham shares are held by institutional investors. 15.8% of Weight Watchers International shares are held by insiders. Comparatively, 22.5% of Graham shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

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.

Profitability

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

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Weight Watchers International and Graham, as provided by MarketBeat.com.

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

Weight Watchers International currently has a consensus price target of $38.67, suggesting a potential downside of 10.39%. Given Weight Watchers International’s higher possible upside, research analysts plainly believe Weight Watchers International is more favorable than Graham.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Weight Watchers International $1.16 billion 2.39 $67.69 million $1.68 25.68
Graham $2.48 billion 1.27 $168.59 million $22.20 25.74

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.

Summary

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

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.

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.

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