Town Sports (CLUB - Snapshot Report)
is a Zacks #1 Rank (Strong Buy) after posting beats in five of the last six reports and getting higher estimates
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
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
Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor