Today's Weak On High Volume Stock: Life Time Fitness (LTM)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Life Time Fitness ( LTM) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Life Time Fitness as such a stock due to the following factors:

  • LTM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.9 million.
  • LTM has traded 264,400 shares today.
  • LTM is trading at 4.03 times the normal volume for the stock at this time of day.
  • LTM is trading at a new low 3.04% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on LTM:

Life Time Fitness, Inc. designs, builds, and operates sports and athletic, professional fitness, family recreation, and spa centers. LTM has a PE ratio of 14.3. Currently there are 4 analysts that rate Life Time Fitness a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Life Time Fitness has been 688,800 shares per day over the past 30 days. Life Time Fitness has a market cap of $1.6 billion and is part of the services sector and leisure industry. The stock has a beta of 1.35 and a short float of 19.5% with 7.24 days to cover. Shares are up 2.9% year-to-date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Life Time Fitness as a hold. 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 ratings report include:
  • 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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