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Life Time Group Holdings, Inc. (LTH) Hits Fresh High: Is There Still Room to Run?

Have you been paying attention to shares of Life Time Group Holdings, Inc. (LTH)? Shares have been on the move with the stock up 56.3% over the past month. The stock hit a new 52-week high of $19.31 in the previous session. Life Time Group Holdings, Inc. has gained 57.1% since the start of the year compared to the -0.5% move for the Zacks Medical sector and the 7.5% return for the Zacks Medical Services industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 9, 2022, Life Time Group Holdings, Inc. reported EPS of $-0.07 versus consensus estimate of $-0.09 while it missed the consensus revenue estimate by 0.5%.

For the current fiscal year, Life Time Group Holdings, Inc. is expected to post earnings of $0.24 per share on $1.82 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $0.39 per share on $2.23 billion in revenues. This represents a year-over-year change of 450% and 22.47%, respectively.

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Valuation Metrics

Life Time Group Holdings, Inc. may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Life Time Group Holdings, Inc. has a Value Score of B. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 77.5X current fiscal year EPS estimates, which is a premium to the peer industry average of 20.7X. On a trailing cash flow basis, the stock currently trades at 456.6X versus its peer group's average of 12.2X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Life Time Group Holdings, Inc. currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Life Time Group Holdings, Inc. fits the bill. Thus, it seems as though Life Time Group Holdings, Inc. shares could still be poised for more gains ahead.

How Does LTH Stack Up to the Competition?

Shares of LTH have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is GoodRx Holdings, Inc. (GDRX). GDRX has a Zacks Rank of # 2 (Buy) and a Value Score of C, a Growth Score of A, and a Momentum Score of F.

Earnings were strong last quarter. GoodRx Holdings, Inc. beat our consensus estimate by 75%, and for the current fiscal year, GDRX is expected to post earnings of $0.27 per share on revenue of $760.8 million.

Shares of GoodRx Holdings, Inc. have gained 21.9% over the past month, and currently trade at a forward P/E of 22.07X and a P/CF of 50.59X.

The Medical Services industry may rank in the bottom 65% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for LTH and GDRX, even beyond their own solid fundamental situation.

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