Why Life Time Fitness Is Unfit for Portfolios

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, fitness club operator Life Time Fitness (NYSE: LTM  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Life Time Fitness and see what CAPS investors are saying about the stock right now.

Life Time Fitness facts

Headquarters (Founded)

Chanhassen, Minn. (1990)

Market Cap

$2.1 billion

Industry

Leisure facilities

Trailing-12-Month Revenue

$1.1 billion

Management

Founder/Chairman/CEO Bahram Akradi
CFO Michael Robinson

Return on Equity (Average, Past 3 Years)

10.6%

Cash/Debt

$8.6 million / $668.7 million

Competitors

24 Hour Fitness Worldwide
Bally Total Fitness
Gold's Gym International

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 54% of the 350 members who have rated Life Time Fitness believe the stock will underperform the S&P 500 going forward.

Earlier this week, one of those Fools, William163264, succinctly summed up the Life Time Fitness bear case for our community:

I worked for 2 different LTFs on the East Coast, and unfortunately, their [strengths] are not in categories that warrant an investment. Great personal trainers, however the leadership and sales departments are only average. ...

Profit will continue to fall for this company, and they have taken out a large amount of debt to expand nationally and saturate highly populated areas. Those areas are now seeing smaller competitors who offer the more diverse gym experience that was once dominated by this company. I believe it will shrink down to a smaller number of gyms and a smaller number of loyal members. A chunk of the market is now going elsewhere and finding a comparable experience at a more affordable price.

FYI, I Know this is a long pitch, but hopefully it will be read by some investors interested in looking at health clubs. I believe this may be one to stay away from.

If you want market-thumping returns, you need to put together the best portfolio you can. Luckily, we've found another stock we are incredibly excited about -- excited enough to dub it "The Motley Fool's Top Stock for 2013." We have compiled a special free report for investors to uncover this stock today. The report is 100% free, but it won't be here forever, so click here to access it now.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2188156, ~/Articles/ArticleHandler.aspx, 4/20/2014 2:58:09 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement