With the current hectic lifestyle of the working population, health and fitness organizations play a major role in reducing stress and controlling external body conditions. Therefore, it could be wise to keep track of high-growth fitness stocks, such as On Holding AG (ONON), Life Time Group Holdings, Inc. (LTH), and Peloton Interactive, Inc. (PTON), for active investors.
The growing trend of sedentary lifestyles, combined with heightened awareness about health and fitness, is driving more individuals to pursue physical fitness activities. The youth's interest in exercise and entertainment facilities is notable. The incorporation of fitness equipment and exercise facilities into healthcare services is driving growth in the fitness market.
Therefore, the global fitness and recreational sports centers market is estimated to grow at a CAGR of 9.8% by 2028.
Moreover, individuals are prioritizing their physical and mental health, and as a result, they are looking for apparel that can be easily transitioned from exercise to everyday activities. Athleisure companies profit from this trend by providing fashionable yet practical clothing that encourages an active lifestyle and personifies wellness principles.
Considering the encouraging economic trends, let’s delve into the fundamentals of the top three fitness stocks in detail:
On Holding AG (ONON)
Headquartered in Zurich, Switzerland, ONON engages in the development and distribution of sports products worldwide. The company offers athletic footwear, apparel, and accessories for high-performance running, outdoor, training, all-day activities, and tennis.
ONON’s total assets grew at a CAGR of 60.9% over the past three years. Similarly, its revenue grew at a CAGR of 57.6% during the same period.
ONON’s trailing-12-month EBIT margin of 9.36% is 19.1% higher than the industry average of 7.86%. Its trailing-12-month Return on Total Capital of 8.39% is 35.2% higher than the industry average of 6.20%. Also, its 13.62% trailing-12-month levered FCF margin is 162.2% higher than the industry average of 5.19%.
ONON’s net sales increased 20.9% year-over-year to CHF508.20 million ($596.99 million) for the first quarter that ended March 31, 2024. The company’s gross profit grew 23.8% from the year-ago value to CHF303.30 million ($356.29 million). Its net income and EPS came in at CHF91.40 million ($107.37 million) and CHF0.28, up 2.1% and 200% year-over-year, respectively.
Street expects ONON’s revenue and EPS for the second quarter (ended June 2024) to increase 30.9% and 329.7% year-over-year to $661.67 million and $0.20, respectively. Furthermore, the company surpassed the consensus revenue estimates in three of the trailing four quarters, which is impressive.
Shares of ONON have gained 37.1% over the past six months to close the last trading session at $37.24.
ONON’s POWR Ratings reflect this positive outlook. ONON has a B grade for Quality and Growth. It is ranked #17 out of 34 in the Athletics & Recreation industry. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
In addition to the POWR Ratings highlighted above, one can access ONON’s ratings for Stability, Sentiment, Momentum, and Value here.
Life Time Group Holdings, Inc. (LTH)
LTH provides health, fitness, and wellness experiences to a community of individual members in the United States and Canada. It primarily designs, builds, and operates sports and athletic, professional fitness, family recreation, and spa centers in a resort-like environment, principally in suburban and urban locations of metropolitan areas.
LTH’s total assets grew at a CAGR of 5.2% over the past three years. Similarly, its revenue grew at a CAGR of 32.64% during the same period.
LTH’s trailing-12-month EBIT margin of 12.54 is 58.8% higher than the industry average of 7.90%. Its trailing-12-month gross profit margin of 46.64% is 26.5% higher than the industry average of 36.88%. Also, its 12.54% trailing-12-month EBIT margin is 58.8% higher than the industry average of 7.90%.
For the second quarter that ended June 30, 2024, LTH’s total revenue increased 18.9% year-over-year to $667.80 million. The company’s adjusted net income came in at $52.40 million, up 37.9% from the previous year’s quarter. Its adjusted income per common share increased 465.9% from the year-ago value to $0.25.
Analysts expect LTH’s revenue and EPS for the third quarter (ending September 2024) to increase 14.2% and 71.8% year-over-year to $668.28 million and $0.22, respectively.
LTH’s shares have gained 74.7% over the past six months and 176.7% over the past year to close the last trading session at $22.62.
LTH’s solid fundamentals are reflected in its POWR Ratings. It has an A grade for Growth and a B for Sentiment. The stock is ranked #16 out of 34 stocks in the same industry.
Click here to access the additional LTH ratings (Value, Momentum, Quality, and Stability).
Peloton Interactive, Inc. (PTON)
PTON operates an interactive fitness platform in North America and internationally. The company offers connected fitness products with touchscreens that stream live and on-demand classes under the Peloton Bike, Peloton Bike+, Peloton Tread, Peloton Tread+, Peloton Guide, and Peloton Row names.
PTON’s total assets grew at a CAGR of 23.3% over the past five years. Similarly, its revenue grew at a CAGR of 27.6% during the same period.
PTON’s trailing-12-month gross profit margin of 40.45% is 9.7% higher than the industry average of 36.88%. Its 8.94% trailing-12-month levered FCF margin is 67.3% higher than the industry average of 5.34%.
During the third quarter, which ended March 31, 2024, PTON saw robust growth, with subscription revenue rising 3.1% year-over-year to $437.80 million. Gross profit surged by 14.6% from the year-ago quarter to $309.70 million. In addition, as of March 31, 2024, the company’s total assets stood at $2.41 billion, compared to $2.77 billion as of June 30, 2023.
For the quarter ending September 24, PTON’s revenue is expected to increase 1.9% year-over-year to $606.53 million. Moreover, the company surpassed the consensus revenue estimates in three of the trailing four quarters, which is impressive.
PTON’s stock has plunged 10.1% over the past three months to close the last trading session at $3.08.
PTON’s POWR Ratings reflect bright prospects. The stock has a B grade for Value and Growth. It is ranked #43 in the 51-stock B-rated Consumer Goods industry.
Beyond what is stated above, we’ve also rated PTON for Momentum, Stability, Sentiment, and Quality. Get all PTON ratings here.
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ONON shares were trading at $37.75 per share on Tuesday morning, up $0.51 (+1.37%). Year-to-date, ONON has gained 39.97%, versus a 10.84% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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