Okay, either nautilus ((NYSE: NLS) Still Peloton Interactive ((NASDAQ: PTON) was a standout performer this year, but while the latter’s trendy networked gear is making the most of the headlines, the former has put the work in to rebuilding its business.

Nautilus reported its second straight quarter in record sales, and while it and Peloton have benefited from the COVID-19 pandemic, which is boosting home fitness equipment sales, it seems that consumer behavior and attitudes towards the gym go together Post remain pandemic world.

Image source: Nautilus.

One for the record books

Nautilus reported revenue for the three-month period ending March 31 reached a record $ 206 million, more than double the $ 93 million made in the same three months a year ago and for the first time In the company’s 35-year history, it exceeded $ 200 million (Nautilus) has changed its fiscal year, so this is a transition period in reporting. Operating income of nearly $ 40 million was the third highest level for the fitness company.

Yet like Peloton, it has seen the future of home fitness and realized that it is interconnected. Sales of the Bowflex VeloCore stationary bike and T22 treadmill were strong but were aided by the SelectTech weights Sold out in less than a day when they were introduced a year ago.

To advance connected fitness, Nautilus presented its North Star Roadmap in March. The long-term strategic vision defined where the device manufacturer would see the industry in the next few years.

By the time CEO Jim Barr noted that despite the advent of the gym reopening and the introduction of vaccinations, consumer sentiment about going back to the gym had remained fairly constant. About a quarter of gym members said they would never go to the gym again, and about half feel uncomfortable upon returning.

While this is likely due to confused official news about vaccinations – get one but don’t change your social distancing, masking, etc. habits – Barr said that even if only 10% of consumers keep their home exercise routines it represents still a $ 4.9 billion home fitness opportunity that is significantly larger than it was before the pandemic.

NLS diagram

NLS Data from YCharts

Nautilus looks financially fit as a company. The quarter ended with $ 113 million in cash and less than $ 14 million in debt, compared to $ 28 million in debt a year ago. In addition, over $ 54 million is available for borrowing.

Demand for strength machines such as the Bowflex HomeGyms, which more than tripled sales over the period, caused inventory to drop to unusually low levels. That needs to be replenished to meet the existing demand.

Nautilus is forecasting new sales for the first fiscal year to maintain its heady year-over-year growth rate of 40% to 50%. While rising raw material costs and chip shortages affecting most industries will put pressure on margins, operating margins are expected to be between 6.5% and 8%.

The long-term revenue target under the North Star program of $ 1 billion by 2026 remains achievable and corresponds to an average growth rate of 10% per year. Nautilus assumes that operating margins will be between 10% and 15% annually until then.

Strongman competition

While Nautilus is becoming more like Peloton Interactive with its growing portfolio of connected fitness equipment and the development of its JRNY platform, which is expected to have 250,000 members by the end of fiscal year 2022 and 2 million members by 2026, it remains based on its strength training equipment that it offers create a competitive advantage.

The Bowflex brand is well known in strength training and is expanding its reach by expanding it into the connected fitness world. It also means that the emphasis is on the mid-tier and premium markets, although its products are still significantly cheaper than the high-end gear Peloton offers.

At the same time, Nautilus has narrowed its focus to the consumer market after exiting the commercial side last October when it sold its Octane Fitness business. This is in contrast to Peloton, the recently acquired Precor diversify into commercial sales to grow his business. It will be interesting to see which strategy prevails.

Worldly growth opportunity

Nautilus stock has certainly been the better pick since Peloton’s IPO in 2019, up over 1,000% compared to a gain of around 300% for its affiliated fitness rival. And while both stocks fell as markets slid this year tech-driven growth stocksNautilus is only down 9% compared to a 44% decrease for Peloton.

Past performance is not a guarantee of future results, but Nautilus appears well positioned to continue to benefit from the growing home fitness trend.

This article represents the opinion of the author who may disagree with the “official” referral position of a Motley Fool Premium Consulting Service. We are colorful! Questioning an investment thesis – including one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.