Why Life Time Fitness Is Unfit for Portfolios

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, fitness club operator Life Time Fitness has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Life Time Fitness and see what CAPS investors are saying about the stock right now.

Life Time Fitness facts

Headquarters (Founded)

Chanhassen, Minn. (1990)

Market Cap

$2.1 billion

Industry

Leisure facilities

Trailing-12-Month Revenue

$1.1 billion

Management

Founder/Chairman/CEO Bahram Akradi
CFO Michael Robinson

Return on Equity (Average, Past 3 Years)

10.6%

Cash/Debt

$8.6 million / $668.7 million

Competitors

24 Hour Fitness Worldwide
Bally Total Fitness
Gold's Gym International


Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 54% of the 350 members who have rated Life Time Fitness believe the stock will underperform the S&P 500 going forward.

Earlier this week, one of those Fools, William163264, succinctly summed up the Life Time Fitness bear case for our community:

I worked for 2 different LTFs on the East Coast, and unfortunately, their [strengths] are not in categories that warrant an investment. Great personal trainers, however the leadership and sales departments are only average. ...

Profit will continue to fall for this company, and they have taken out a large amount of debt to expand nationally and saturate highly populated areas. Those areas are now seeing smaller competitors who offer the more diverse gym experience that was once dominated by this company. I believe it will shrink down to a smaller number of gyms and a smaller number of loyal members. A chunk of the market is now going elsewhere and finding a comparable experience at a more affordable price.

FYI, I Know this is a long pitch, but hopefully it will be read by some investors interested in looking at health clubs. I believe this may be one to stay away from.

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The article Why Life Time Fitness Is Unfit for Portfolios originally appeared on Fool.com.

Brian Pacampara and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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