Why the Viva Leisure (ASX:VVA) share price is edging higher today

The Viva Leisure Ltd (ASX: VVA) share price is climbing today following an update on its trading performance and FY21 outlook. Here’s the details.

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The Viva Leisure Ltd (ASX: VVA) share price is climbing today following an update on its trading performance and FY21 outlook.

At the time of writing, health club operator’s shares are swapping hands for $1.94, up 0.52%.

Let’s take a closer look and see what the company updated the ASX with.

Performance update

Investors are pushing Viva Leisure shares higher after the company released a positive update.

In its presentation, Viva Leisure announced an improvement across the business due to the gradual recovery from the COVID-19 pandemic.

As a result, the business noted that all comparisons made below are against its December half-year result. This is because comparing against 12 months ago is not an accurate reflection on business growth.

For the period until April 2021 (first 4 months of 2021), monthly revenue run rate (RRR) jumped to $8.1 million. This represents a 11.4% increase on its December half-year results. All of Viva Leisure’s facilities were re-opened as of January 2021, highlighting a return of members.

In addition, the company managed to also grow its member base to 295,808 members, a lift of 8% on H1 FY20. Viva Leisure’s continued expansion into new locations increased to 306. This figure is up from 296, which contributed to the improved result.

Revenue surged above $8 million. This is a 58% jump when comparing this month against March 2020, before COVID-19 hit. Particularly, the ACT region was the biggest contributor to the overall scorecard, accounting for roughly 45%.

FY21 outlook

Looking ahead, Viva Leisure stated that it is targeting revenue to range from $81 million to $83 million. Over H1 FY21, this is a 25.6% to 31.2% growth.

Furthermore, earnings before interest, tax, depreciation and amortisation (EBITDA) is estimated to come between $13 million to $13.5 million. This reflects a 32.1% to 41.1% increase on the December half-year result. EBITDA margin is also set to jump around 16.5% to 17.5%.

About the Viva Leisure share price

The Viva Leisure share price is down close to 20% over the past 12 months. It’s worth noting that its shares plunged to a low of 1.825 due to market slump this month.

Based on the current share price, Viva Leisure commands a market capitalisation of roughly $158 million.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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