Life Time Fitness Earnings Preview

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Investors hope Life Time Fitness (NYS: LTM) will top analyst estimates once again after beating predictions by $0.02 in the previous quarter. The company will unveil its latest earnings on Thursday, Oct. 20. Life Time Fitness and its subsidiaries are mainly engaged in designing, building, and operating sports and athletic, professional fitness, family recreation, and spa centers in a resort-like environment.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Life Time Fitness with six of 11 analysts rating it hold. Analysts don't like Life Time Fitness as much as competitor Town Sports International Holdings overall. Three out of three analysts rate Town Sports International Holdings a buy compared to five of 11 for Life Time Fitness. Analysts still rate the stock a hold, but they are a bit more wary about it compared to three months ago.
  • Revenue Forecasts: On average, analysts predict $260.5 million in revenue this quarter. That would represent a rise of 9.3% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.65 per share. Estimates range from $0.63 to $0.67.

What our community says:
Most CAPS All-Stars are skeptical of LTM prospects, with 62.2% awarding it an "underperform" rating. The community is split on the stock with 45.5% of Fools granting it an "outperform" rating and 54.5% an "underperform" rating. Fools are skeptical of Life Time Fitness and haven't been shy with their opinions lately, logging 182 posts in the past 30 days. Life Time Fitness' bearish CAPS rating of one out of five stars falls short of the Fool community sentiment.

Management:
Life Time Fitness' profit has risen year over year by an average of 10% over the past five quarters. Revenue has now gone up for three straight quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters. 

QuarterQ2Q1Q4Q3
Gross Margin39.0%37.9%39.1%39.1%
Operating Margin18.0%16.7%15.5%19.1%
Net Margin9.7%8.7%7.9%9.8%
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