Life Time

Life Time Group Holdings Inc is assigned a 3-star quantitative star rating, illustrating our stance that this share class is a balanced choice, but prudent investors should consider looking elsewhere. The stock currently trades at a price consistent with our quantitative fair value estimate, which has a medium uncertainty rating.

The company's unfavorable dividend structure undermines our quantitative valuation. Dividends represent a stable form of future cash flows returned to shareholders, and low dividend payments can increase the perceived risk of a business. For example, the firm's forward dividend yield of 0% falls in the bottom 30% globally. This could imply a planned dividend cut or relatively high share price, which contributes to our balanced fair value estimate.

The company's valuation metrics are an additional cause for concern. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. The firm's book value yield of 36.1%, for example, sits in the bottom 40% compared with global peers. The market value of this company's shares looks expensive relative to the book (accounting) value of equity, which further promotes our neutral price/fair value ratio.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has outperformed the broader universe over the past year. While we believe the stock is fairly-valued, this outperformance had a negative impact on our valuation estimate.

The company's narrow economic moat rating suggests it should be able to maintain robust profitability for a decade or longer before competition erodes its advantage. In addition, the company's moderate financial health score is decent and doesn't seriously concern us with regard to financial distress.