QAV Stock Investment Report: Viva Leisure Limited (ASX:VVA)

#### Overview of the Com­pa­ny

Viva Leisure Lim­it­ed oper­ates health clubs and offers a diverse port­fo­lio of fit­ness brands across Aus­tralia, New Zealand, and India. The com­pa­ny runs its health clubs under the Club Lime and Hiit Repub­lic brands and fran­chis­es health clubs under the Plus Fit­ness brand. Its oper­a­tions extend to FNF and Pin­na­cle brand­ed clubs, the Ladies Only brand for women, and bou­tique offer­ings like Psy­cle Life, hiit repub­lic, GROUNDUP, and Stu­dio. Addi­tion­al­ly, Viva Leisure man­ages indoor aquat­ics through its Aquat­ics brand and pro­vides swim edu­ca­tion via its Swim School brand. Beyond its core fit­ness oper­a­tions, the com­pa­ny also offers deb­it ser­vices. Estab­lished in 2004, Viva Leisure’s head­quar­ters are sit­u­at­ed in Mitchell, Aus­tralia.

#### Cur­rent Share Price Analy­sis

At the date of analy­sis, the share price is $1.44, sur­pass­ing both Intrin­sic Val­ue 1 (IV1) and Intrin­sic Val­ue 2 (IV2). This sug­gests the stock might be over­val­ued rel­a­tive to its intrin­sic worth.

#### Aver­age Dai­ly Turnover

With an aver­age dai­ly turnover of $0.073 mil­lion, Viva Leisure Lim­it­ed is clas­si­fied as a Small-Cap stock. This clas­si­fi­ca­tion may pose chal­lenges for larg­er investors, par­tic­u­lar­ly con­cern­ing liq­uid­i­ty and the abil­i­ty to exit larg­er posi­tions with­out affect­ing the mar­ket price.

#### Yield vs. Bank Debt

The com­pa­ny’s yield is present­ly low­er than pre­vail­ing mort­gage rates.

#### Finan­cial Health Assess­ment

Viva Leisure’s finan­cial health is rat­ed as ear­ly warn­ing, but with a sta­ble trend. This sug­gests poten­tial risks in main­tain­ing oper­a­tions and meet­ing finan­cial com­mit­ments, war­rant­i­ng cau­tious con­sid­er­a­tion from investors.

#### Price-to-Earn­ings Ratio

As the com­pa­ny is cur­rent­ly oper­at­ing at a loss, it does not have a Price-to-Earn­ings (PE) ratio. How­ev­er, the fore­cast Earn­ings Per Share (EPS) for the upcom­ing year stands at 13.4 cents.

#### Price to Oper­at­ing Cash Flow Ratio

The Price to Oper­at­ing Cash Flow ratio is 2.45, falling below our thresh­old of 7. This indi­cates that it would take only approx­i­mate­ly 2.45 years for the com­pa­ny’s oper­a­tions to gen­er­ate enough cash to cov­er the stock price, sug­gest­ing poten­tial under­val­u­a­tion on this met­ric.

#### Share Price in Rela­tion to Book Val­ue

The share price exceeds the book val­ue, which is a neg­a­tive sig­nal.

#### Own­er­ship Struc­ture

Direc­tors own 20.36% of shares, a sig­nif­i­cant lev­el of own­er­ship (over 10%). This is a pos­i­tive indi­ca­tor, sug­gest­ing strong align­ment with share­hold­er inter­ests.

#### Recent Mar­ket Sen­ti­ment

While there has been no recent 3‑point upturn in the stock­’s price move­ment, it has exhib­it­ed pos­i­tive mar­ket sen­ti­ment for the last 18 months.

#### Con­sis­ten­cy of Equi­ty Growth

The com­pa­ny has had five report­ing peri­ods of con­sis­tent­ly increas­ing equi­ty, but not the six we required to give them a pos­i­tive score. How­ev­er if they con­tin­ue with the trend, this will be a pos­i­tive for them in the future, an indi­ca­tor of man­age­ment qual­i­ty and the sus­tain­abil­i­ty of growth.

#### Qual­i­ty and QAV Score

The Qual­i­ty Score is 57%, below the ide­al thresh­old of 75%. How­ev­er, the QAV Score of 0.23 sur­pass­es the buy sig­nal thresh­old of 0.10, sug­gest­ing some poten­tial oppor­tu­ni­ties for investors.

#### Con­clu­sion

Viva Leisure Lim­it­ed presents a mixed invest­ment oppor­tu­ni­ty. While cer­tain met­rics, such as the Price to Oper­at­ing Cash Flow ratio and sig­nif­i­cant direc­tor own­er­ship, sug­gest poten­tial advan­tages, oth­er fac­tors, includ­ing its weak finan­cial health, lack of recent mar­ket sen­ti­ment, and pre­mi­um pric­ing rel­a­tive to book val­ue, war­rant cau­tion. Investors should care­ful­ly weigh these strengths and weak­ness­es against their invest­ment objec­tives and risk tol­er­ance.

#### Strengths

- Price to Oper­at­ing Cash Flow ratio of 2.45
- Sig­nif­i­cant direc­tor own­er­ship at 20.36%

#### Weak­ness­es

- Price above Intrin­sic Val­ues 1 and 2
- Price above book val­ue
- Incon­sis­tent equi­ty growth
- Weak finan­cial health
- No recent upturn in sen­ti­ment

#### Dis­claimer

This pod­cast is an infor­ma­tion provider and in giv­ing you prod­uct infor­ma­tion we are not mak­ing any sug­ges­tion or rec­om­men­da­tion about a par­tic­u­lar prod­uct. The infor­ma­tion has been pre­pared with­out tak­ing into account your indi­vid­ual invest­ment objec­tives, finan­cial cir­cum­stances or needs. Before you decide whether or not to acquire a par­tic­u­lar finan­cial prod­uct you should assess whether it is appro­pri­ate for you in the light of your own per­son­al cir­cum­stances, hav­ing regard to your own objec­tives, finan­cial sit­u­a­tion and needs. You may wish to obtain finan­cial advice from a suit­ably qual­i­fied advis­er before mak­ing any deci­sion to acquire a finan­cial prod­uct. Please note that all infor­ma­tion about per­for­mance returns is his­tor­i­cal. Past per­for­mance should not be relied upon as an indi­ca­tor of future per­for­mance; unit prices and the val­ue of your invest­ment may fall as well as rise.

Trans­paren­cy is impor­tant to us. We will always be very open and hon­est about [the stocks we own](https://qavpodcast.com.au/disclosure/). We will also always give our audi­ence advance notice when we intend to buy or sell a stock that we are going to talk about on the pod­cast. This is so we can nev­er be accused of pump­ing a stock to our own advan­tage. If we talk about a stock we cur­rent­ly own, we will make it known that we own it.

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