Life Time Group Holdings (NYSE:LTH) Is Posting Promising Earnings But The Good News Doesn’t Stop There

Shareholders appeared to be happy with Life Time Group Holdings, Inc.'s (NYSE:LTH) solid earnings report last week. This reaction by the market reaction is understandable when looking at headline profits and we have found some further encouraging factors.

View our latest analysis for Life Time Group Holdings

How Do Unusual Items Influence Profit?

For anyone who wants to understand Life Time Group Holdings' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$28m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Life Time Group Holdings to produce a higher profit next year, all else being equal.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Life Time Group Holdings' Profit Performance

Unusual items (expenses) detracted from Life Time Group Holdings' earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Life Time Group Holdings' statutory profit actually understates its earnings potential! And on top of that, its earnings per share increased by 14% in the last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. So while earnings quality is important, it's equally important to consider the risks facing Life Time Group Holdings at this point in time. Be aware that Life Time Group Holdings is showing 3 warning signs in our investment analysis and 1 of those doesn't sit too well with us...

Today we've zoomed in on a single data point to better understand the nature of Life Time Group Holdings' profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.