NEW YORK (TheStreet) -- Shares of Life Time Fitness (LTM) rose 8.03% to $44.94, a four year high, following the health and fitness company's announcement to convert its land holdings into a real estate investment trust earlier today.
The operator of more than 110 fitness centers said converting to a REIT would provide "substantial benefits" and help with its long-term growth plans.
The company's board also adopted a shareholder rights plan to prohibit ownership of more than 9.8% of its stock.
Separately, TheStreet Ratings team rates LIFE TIME FITNESS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate LIFE TIME FITNESS INC (LTM) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 6.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- 35.58% is the gross profit margin for LIFE TIME FITNESS INC which we consider to be strong. Regardless of LTM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.12% trails the industry average.
- Even though the current debt-to-equity ratio is 1.04, it is still below the industry average, suggesting that this level of debt is acceptable within the Hotels, Restaurants & Leisure industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.16 is very low and demonstrates very weak liquidity.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry average. The net income has decreased by 10.2% when compared to the same quarter one year ago, dropping from $33.19 million to $29.81 million.
- You can view the full analysis from the report here: LTM Ratings Report
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