Shares are currently a Zacks #1 Rank (Strong Buy) and, while not a great value, have excellent short-term potential.
Town Sports International is an owner/operator of fitness clubs in the Northeast and Mid-Atlantic regions. They are the 5th largest club operator in the U.S and also have 3 locations in Switzerland.
On Jul 27 Town Sports blew away expectations with its second quarter results. Earnings per share came in at $0.16, a nickel better than expected, and giving them 9 surprises in the past 11 quarters. The other 2 periods they met expectations.
Revenue was up less than 1% to $118 million. Not exactly impressive on the surface, but the company said it was the best quarter in years and they are ahead of their growth plan. Comp sales turn positive sooner than expected and management raised their outlook for the remainder of the year.
Estimates Beefing Up
Full-year forecasts for 2011 rose a dime on average, to $0.38. Next year's estimates are up 15 cents, to $0.60. In 2010 Town Sports earned just 10 cents, so the growth rates are an impressive 285% and 55%, respectively.
Just how much did the market like the earnings results? Take a look below. Not only did they surge on the news, but keep in mind that it was during a very bearish week across the global markets.
This is not going to lure in any value investors, but the growth story could keep the momentum going enough to push through $10 a share.