Life Time Fitness Inc.LTM

Morningstar Rating

Stock Research and Analysis

by R. J. Hottovy, CFA

Life Time Fitness has set itself apart from the crowded fitness club market by offering a high-quality member experience in a resortlike atmosphere. Management has an impressive record of balancing growth with profitability, evidenced by average top-line Read more

Bulls Say

Life Time provides members with access to an unrivaled level of premium club amenities at reasonable monthly rates, creating a meaningful value proposition.

Trends toward healthier lifestyles will probably raise demand for club memberships in coming years. Proposed legislature to offset rising health-care costs could make memberships more affordable.

New centers have been successful across a variety of geographic markets because of a disciplined site selection process and an in-house construction team.

A highly fragmented industry implies opportunities for market share gains. New market entrants face some barriers to success because of the difficulties in building economies of scale.

Electronically transferred monthly dues provide some cash-flow stability, enhancing management's ability to manage working capital. Read more

Bears Say

Rising raw-material and land costs have made new center construction more expensive. If capital requirements continue to increase, new center economics could materially change.

Deteriorating macroeconomic conditions have slowed membership acquisition rates at mature centers; higher unemployment rates could create additional deterrents.

U.S. fitness club market participants have struggled to maintain profitability over an extended period as they compete for market share; Bally Total Fitness is a prime example.

Large-format competitors, including privately held 24-Hour Fitness and LA Fitness, have developed similarities to Life Time centers. With relatively low switching costs, members could be lured away.

Given its concentration in certain markets (Minneapolis, Chicago, Dallas, and Detroit), the firm's operating results are more exposed to local economy fluctuations than those of competitors with a national footprint. Read more

Strategy

Life Time uses a three-prong growth strategy: continued unit expansion; attract and retain 90% of the maximum center capacity by the third year of operation to achieve fixed-cost leverage; and augment Read more

Management

Bahram Akradi established Life Time in 1992 and has been CEO and chairman since 1996. Corporate governance could be improved through the separation of the chairman and CEO roles, but with six outside directors (in addition to Akradi), the board is sufficiently Read more

Profile

Founded with a single center in 1992, Life Time Fitness has grown to be one of the largest fitness club operators in the United States. The firm uses large, sprawling centers Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

Dollar General Stock May Lose a Few Cents
Watch more