Saturday, May 19, 2007

Get a Life-time (LTM)

Grab your bike shorts, goggles, running shoes, tennis racquet, and iPod, let’s discuss Life Time Fitness (LTM)

Today I am officially on the life Time bandwagon! This place is amazing. With first class amenities and a helpful staff (you know who you are) life Time has produced a top of the line club atmosphere. Life Time’s core competences include cleanliness, friendliness, and the ability to consistently exceed the customer’s expectations. These clubs are enormous and have enough machines to satisfy the most demanding members. Not only does Life Time have the standard gym equipment they also have a full salon, deli, childcare, indoor and outdoor pools, indoor basketball, racquetball, rock climbing wall and a field of tennis courts. From an investors point of few LTM is a great growth stock. One of the best things about LTM is that they own much of the real estate the clubs sit on. This is a great asset for the company and investors have taken notice.

Obesity is a huge problem in America and the only way to really fight this epidemic is to exercise (LTM) and eat healthy (WFMI). With over seven million people in America 100 pounds or more over weight the time for change is upon us.

I am not the spokesman (officially) for life Time, but as member I am quite impressed with the facilities. As a stockholder I have a few concerns with LTM. One of the downsides to this company is the overexpansion of clubs. This type of growth is unbelievable for a company of this size and although growth can be very beneficial to stockholders, it can be detrimental to a company. With so much expansion it is hard to analyze the profitability of a company like LTM. LTM should continue to grow and open new clubs but they need to make sure quality is not jeopardized in the process.

LTM has 60 fitness centers, as of December 31, 2006, and has plans to open 8 new centers in 2007. Net revenue jumped from 390.1 million in 2005, to 511.9 million in 2006. For the complete 2006 annual report click here. LTM is currently trading for around $50 a share and has a P/E ratio of 34 and a forward P/E of 23.

Disclosure: actively trade long
Note: See for charts

1 comment:

Howard said...

was going to wallstrip this a few months ago. still need to. good analysis