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Town Sports International Holdings, Inc., together with its subsidiaries, owns and operates fitness clubs in the northeast and mid-Atlantic regions of the United States. As of December 31, 2011, it operated 160 fitness clubs comprising 108 New York Sports Clubs, 25 Boston Sports Clubs, 18 Washington Sports Clubs, and 6 Philadelphia Sports Clubs, as well as 3 clubs located in Switzerland. The company is based in New York, New York.
CLUB Tops Expectations Five of Last Six Quarters
Town Sports has beaten the Zacks Consensus Estimate in five of the last quarters. The one time the company did not beat the bottom line estimates was the September 2011 quarter, when the company reported $0.08 in EPS, in line with expectations.
Two of the beats helped substantially move Town Sports stock. The March 2011 quarter was a beat of $0.05 or 250%. Following this report, the stock moved higher by 20%. The next quarter, June 2011, saw a similar beat of $0.05, but expectations had moved higher so the beat worked out to be 45%. The stock moved up 17% in the session following the beat.
Town Sports Recently Reported Earnings
On February 15, 2012 the company reported revenue of $116 million roughly $1 million more than the Zacks Consensus Estimate and higher than the $114 million reported in the year ago period. EPS of $0.12 was $0.03 ahead of the estimate or a 33% beat. Following the report, the stock moved higher by 10%.
Earnings Estimates Bumped Up
Following the most recent earnings report, analysts bumped up their earnings estimates for 2012. The Zacks Consensus Estimate for 2012 EPS moved from $0.64 in January 2012 to the current level of $0.68. The 2013 estimate spiked higher following the recent earnings release, moving from $0.71 in February to the current level of $0.83
Town Sports has a mixed valuation picture. 29x trailing twelve months PE is a little above the industry average of 23x, but the forward PE of 18x compares favorably to the 23x industry average. The price to book multiple is well above the industry average while price to sales of 0.6x is well below the 1.5x industry average.
When we look at the price and consensus chart for Town Sports, we see the stock hugged the estimates throughout much of 2010. Estimates moved for 2012 and it has taken the stock a little while to catch up, and the same is true for expectations for 2013. The fact that the company has guided for revenue growth is a big part of why the stock has moved from $9 to $12, but as the beats continue more investors will be drawn to this small cap. Town Sports is a Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service
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