Life Time Fitness Earnings Preview

Motley Fool Staff
Updated

After beating estimates last quarter by $0.01, Life Time Fitness (NYS: LTM) has set the standard for itself. The company will unveil its latest earnings Thursday. 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?: Half of analysts think investors should stand pat on Life Time Fitness while the remaining half rate the stock as a buy. 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 10 for Life Time Fitness. Analysts' rating of Life Time Fitness has stayed constant from three months prior.

  • Revenue Forecasts: On average, analysts predict $246.2 million in revenue this quarter. That would represent a rise of 10.1% from the year-ago quarter.

  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.55 per share. Estimates range from $0.53 to $0.58.

What our community says:
Most CAPS All-Stars are skeptical of LTM's prospects, with 59.7% granting it an "underperform" rating. Fools are split on the stock, as 45.1% of the community is giving it an "outperform" rating and 54.9% an "underperform" rating. Fools are bearish on Life Time Fitness and haven't been shy with their opinions lately, logging 183 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 10.5% 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 serve as an illustration of how efficiently a company captures portions of sales dollars. The company's operating margins have been decreasing year-over-year for the last four quarters. Operating margins reflect the total sales revenue that the company retains after costs. See how Life Time Fitness has been doing for the last four quarters:

Quarter

Q3

Q2

Q1

Q4

Gross Margin

40.0%

39.0%

37.9%

39.1%

Operating Margin

18.8%

18.0%

16.7%

15.5%

Net Margin

10.2%

9.7%

8.7%

7.9%

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