Do You Know How Profitable FXLV Is?

By Scott Lee • Wednesday, August 16 09:55 • Permanent Link

Small-cap company F45 Training is down -7.0% during this morning's trading session, while the S&P 500 moved 0.0%. With last year's reported gross margins at 74.7%, you might be wondering if today's drop is an opportunity to pick up shares of a profitable company at a discount.

Gross margins give insight into the basic economics of the company' product line and its pricing power in the target market, yet it's essential to balance this with a review of F45 Training's operating margins. Operating margins take into account the company's fixed overhead costs, in addition to the cost of revenue used to calculate gross margins.

Is F45 Training plagued with bloated overhead expenses that are eating away at an otherwise profitable business? Or is the company currently unprofitable because it is in a growth phase? A combined analysis of both gross and operating margins can help answer these questions, so that you understand what kind of business you are investing in.

Date Reported	Revenue ($ k)	Cost of Revenue ($ k)	Gross Margins (%)	YoY Growth (%)
2021-12-31	134,022	33,893	74.71	16.77
2020-12-31	82,313	29,650	63.98	8.4
2019-12-31	92,690	37,988	59.02	n/a

F45 Training's gross margins have a coefficient of variability of 12.2%, with a low percentage rate being more desirable as it indicates stability. Revenues have a delta of 13.1% while cost of revenue is shrinking at a rate of -3.7%, which allows for the company's gross margins to grow at an average 8.2% per year.

Date Reported	Total Revenue ($ k)	Operating Expenses ($ k)	Operating Margins (%)	YoY Growth (%)
2021-12-31	134,022	182,667	-61.59	-882.3
2020-12-31	82,313	57,827	-6.27	-142.8
2019-12-31	92,690	41,126	14.65	n/a

The table above tells us that, on average, F45 Training has not been profitable over the last four years, which should be a warning sign to prospective investors. Indeed, the company's operating margins are sinking at rate of -23.5%

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.