Recs

10

1-Star Stocks Poised to Plunge: Life Time Fitness?

By Brian D. Pacampara | More Articles
January 20, 2009 | Comments (3)

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Based on the aggregated intelligence of 125,000-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. Our data has shown that one-star stocks woefully lag the market average; conversely, five-star stocks outperform the S&P 500 by a significant margin.

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

Life Time Fitness facts

Headquarters (Founded)

Chanhassen, Minnesota (1990)

Market Cap

$575.82 million

Industry

Leisure Facilities

TTM Revenue

$746.77 million

Management

Founder/CEO Bahram Akradi

COO Michael Gerend

Total Debt/Equity

101%

Competitors

Town Sports International (Nasdaq: CLUB  ) ,

Bally Total Fitness

CAPS members bearish on LTM also bearish on

Centex (NYSE: CTX  ) ,

Toll Brothers (NYSE: TOL  )

CAPS members bullish on LTM also bullish on

Google (Nasdaq: GOOG  ) ,

Altria (NYSE: MO  ) ,

Goldman Sachs (NYSE: GS  )

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 178 of the 314 members who have rated Life Time Fitness -- some 57% -- believe the stock will underperform the S&P 500 going forward. These Fools include CAPS All-Star dexion10 and CashonDelivery.

Last month, dexion10 wrote that Life Time Fitness "is similar to Bally's Total Fitness, a gym that came back from bankruptcy and then filed for bankruptcy again in just 14 months. Gym memberships will be a casualty of the recession and [Life Time] runs high end gyms."

In a pitch from two weeks later, CashonDelivery, after taking the lead from stock whistleblower Citron Research, shared that same bearish stance:

After looking into the company, I agree it's terrible. They're generating most cash flow from sale-leaseback transactions, but they only have so many properties and I don't see the real estate market for huge fitness centers improving greatly, especially if the purchasing parties have concerns about the long-term viability of their new lease tenant. Coupled with declining utilization by members, this company is the walking dead.

What do you think about Life Time Fitness, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 125,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

The Steve Jobs Betrayal
You may already know that in the final year of his life, Jobs revealed a stunning betrayal — and told his biographer, "I will spend my last dying breath... and every penny of Apple's $40 billion in the bank to right this wrong." What was it that made Jobs so irate — and why could it make a few in-the-know investors some major profits over the coming months and years?

Enter your email address below to find out what made Jobs so enraged!

Looking for stocks that are fit for the fight? Try out the Motley Fool Rule Breakers newsletter free for 30 days. It's risk-free -- unlike that bench press at the gym.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Google is a Rule Breakers pick. The Fool's disclosure policy always gets a perfect score.


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.

  • Report this Comment On January 28, 2009, at 1:36 PM, ZZyzxZZ wrote:

    I'm curious about the timeliness of the 1* ratings? Certainly not recently. The stock got killed long ago on speculation that the 1st thing the unemployed do is sell their Gym memberships.

    Since this story aired, LTM has increased from $14.10 to $16.59 as I write this. So this article didn't scare away anybody who knows about this company.

    Like Ballys? Hardly. LTM is like a country club without golf, except it's much better than a country club without golf. Check one out, if you can find a parking spot. It's very family oriented.

    As for financing their daily operations, there is plenty of cash coming in to do that . The problem is, they are expanding quickly and like so many others were depending on short term low interest loans to fund the expansion. Did you hear the credit markets froze up last year? So they had to scale back their expansion some and sell/leaseback some existing properties to raise cash they couldn't get from the banks. That might have been a savvy thing to do anyways, who knows?

    Yes, their subscription base has shrunk a bit. Maybe I'll rejoin. The one's in Detroit were too crowded anyways. That's why I quit.

  • Report this Comment On January 30, 2009, at 12:31 PM, Ishmael94 wrote:

    I agree that Life Time is hardly a Ballys, but the difference has always been in the quality of the facility, services offered, and warm, inviting atmosphere provided by the staff. Recent cutbacks have made a noticeable difference in all these areas. They should actually spend the cash you referenced to properly maintain daily operations. If you do decide to rejoin, make sure to pay close attention during your tour! Just my two cents.

  • Report this Comment On February 03, 2009, at 9:36 AM, Ohms500 wrote:

    Here's my two cents!

    Buy LTM stocks now!

    In a year, you'll thank me.

    I purchased at $12.00 and when it gets to 50.00... wahoo!

    I really hope it gets lower so I can purchase more.

Add your comment.

Compare Brokers

Fool Disclosure

DocumentId: 813198, ~/Articles/ArticleHandler.aspx, 5/27/2012 8:37:40 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...

Today's Market

updated 1 day ago Sponsored by:
DOW 12,454.83 -74.92 -0.60%
S&P 500 1,317.82 -2.86 -0.22%
NASD 2,837.53 -1.85 -0.07%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

5/25/2012 4:00 PM
LTM $42.92 Down -1.08 -2.45%
Life Time Fitness,… CAPS Rating: *
GS $96.70 Down -0.16 -0.17%
Goldman Sachs Grou… CAPS Rating: ***
MO $32.11 Down -0.15 -0.46%
Altria Group, Inc. CAPS Rating: *****
TOL $28.20 Up +0.24 +0.86%
Toll Brothers, Inc… CAPS Rating: **
CLUB $11.73 Down -0.17 -1.43%
Town Sports Intern… CAPS Rating: *
CTX $11.95 Down +0.00 +0.00%
Centex Corp CAPS Rating: *
GOOG $591.53 Down -12.13 -2.01%
Google CAPS Rating: ****

Advertisement