Why Life Time Fitness' Shares Plunged

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of fitness center operator Life Time Fitness (NYS: LTM) were looking winded today as they fell as much as 12% in intraday trading after the company reported first-quarter results.

So what: On an absolute basis, the results from Life Time's first quarter looked pretty darn fit. Revenue for the quarter came in at $268 million, up nearly 12% from the prior year, while earnings per share finished at $0.62, up 22% from the same quarter in 2011. Growth was helped by 5.4% growth in same-center revenue for centers that had been open 13 months or longer.


Revenue for the quarter fell a bit short of Wall Street's average estimate of $271 million, but earnings per share topped the $0.61 expectation.

Now what: Similar to the current-quarter performance, Life Time's outlook for the full year looks good -- expected revenue growth of 11% and earnings-per-share growth of 23%. However, the guidance didn't live up to the high hopes of Wall Street analysts. Analysts were looking for $1.13 billion in full-year revenue and $2.75 in per-share profit. At the midpoint of its guidance, management put sales and EPS, respectively, at $1.12 billion and $2.69.

While investors may be doing some readjusting of expectations today, there's definitely a reason to temper the pessimism, because Life Time Fitness' first quarter makes it look like the company is doing a lot of good things.

Want to keep up to date on Life Time Fitness?Add it to your watchlist.

At the time this article was published Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

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