Life Time Group Holdings is Friday's IBD Stock Of The Day, as the fitness center operator is profitable again and looking to capitalize on pickleball popularity. LTH stock has muscled up to around a buy point, with tight recent action.
The Minnesota-based company operates around 160 fitness centers in the U.S. and Canada. It is also staking out the pickleball market and is the largest operator of courts with more than 500 across its locations.
Pickleball — a paddle sport that combines elements of tennis, badminton and Ping-Pong — has grown in popularity in recent years. More than 36.5 million people played pickleball from August 2021 to August 2022, according to the Association of Pickleball Professionals. LeBron James, Tom Brady and Patrick Mahomes along with other stars have also recently invested in professional pickleball teams.
"We're seeing a stunning growth of pickleball across generations, from kids to grandparents. Everyone is finding joy in the game," said LTH Vice President of Racquet Sports Ajay Pant, in a statement on April 26.
On April 25, LTH topped Wall Street estimates for its first-quarter financials. LTH reported EPS of 14 cents, up from a loss of 20 cents per share a year ago. Meanwhile, sales jumped 30% to $511 million in Q1, as the company reported its membership count, membership dues and in-center spending all increased.
Life Time also issued upbeat guidance for Q2 as people return to gyms after the Covid pandemic. LTH expects sales to rise about 23% in the second quarter. For the full year, Life Time raised its adjusted EBITDA guidance by $30 million to $470-$490 million.
Analysts predict LTH second-quarter earnings of 10 cents per share, up from a loss of 1 cent per share in the same quarter in 2022. Wal Street forecasts sales increasing 23% to $567 million.
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Life Time Stock
LTH shed 2.1% to 19.58 Friday during market trade amid lower-than-average volume. Life Time stock has dropped more than 5.8% so far in May.
LTH has formed a cup base with a 20.45 buy point, according to MarketSmith. That 20.45 entry can still be used even as recent action could be interpreted as a cup-with-handle base. LTH is currently around 3% below that 20.45 buy point and has been trading tightly over the past week.
Life Time surged 22% between April 25 and May 1, when it hit its recent high of 21.39. The advance came on the company's Q1 earnings and revenue beat.
LTH stock fell back below the buy point in early May as Planet Fitness and Xponential Fitness disappointed with their earnings reports, sending PLNT and XPOF stock plunging. But Life Time quickly moved sideways, with increasingly tight action between the buy point and the 21-day moving average.
LTH is the top ranking stock in IBD's Leisure-Services industry group. Life Time stock has a 96 Composite Rating out of 99. LTH also has a 94 Relative Strength Rating. The EPS Rating is 81 out of 99.
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