Following my coverage on Planet Fitness ( PLNT ) in Dec '24, which I upgraded to a buy rating due to my expectation that revenue growth should accelerate to mid-teens, this post is to provide an update on I take a fundamentals-based approach to value investing.I disagree with the common misconception held by many investors that low multiple stocks must be cheap. I look for companies that offer the best long-term durability at the most affordable prices. Consequently, I have a propensity to be drawn to compa ...

It has been about a month since the last earnings report for Planet Fitness (PLNT) . Shares have added about 11% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Planet Fitness due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.How Have Estimates Been Moving Since Then ...

In the last year, the S&P 500 has climbed 17%. That's a better-than-average gain, historically. But some businesses have fared much better, and investors should take notice of them. In particular, one consumer-facing company has well outperformed the broader index: Its shares have soared by 42% just in the past 12 months (as of Feb. 25). Should you buy this growth stock with $1,000 right now, which would give you about 11 shares at the current price?On solid footingThe growth stock in question is Planet Fit ...

Core Viewpoint - Planet Fitness, Inc. reported strong fourth-quarter 2024 results, with adjusted earnings and revenues exceeding expectations, but faced negative investor sentiment due to a cautious 2025 outlook [1][2]. Financial Performance - Adjusted earnings per share (EPS) for the fourth quarter were 70 cents, surpassing the Zacks Consensus Estimate of 62 cents by 12.9%, and up from 60 cents in the prior-year quarter [3]. - Quarterly revenues reached $340.5 million, exceeding the consensus mark of $327 million by 4.2%, and improved 19.4% year over year, driven by a 5.5% increase in same-club sales [3]. - Adjusted EBITDA for the quarter was $130.8 million, an increase from $114.3 million reported in the year-ago quarter [4]. Segment Performance - Franchise segment revenues rose 11% year over year to $109 million, driven by increased royalty revenues and new club openings [5]. - Corporate-owned clubs generated revenues of $126.3 million, up 8.5% year over year, attributed to new clubs opened and acquired [6]. - Equipment segment revenues totaled $105.1 million, a significant increase of 49.2% year over year, due to higher sales to franchisee-owned clubs [7]. 2024 Highlights - Total revenues for 2024 were $1.18 billion, compared to $1.07 billion in 2023 [10]. - Adjusted EBITDA for 2024 was $487.7 million, up from $435.4 million in 2023 [10]. - Adjusted net income per share (diluted) for 2024 was $2.59, compared to $2.24 in the previous year [10]. 2025 Outlook - For 2025, the company expects revenue growth of approximately 10% over 2024 levels, with same-club sales growth projected in the 5-6% range [11]. - Adjusted EBITDA for 2025 is estimated to grow by approximately 10%, while adjusted net income is expected to increase in the 8-9% range [12]. - Capital expenditures are projected to rise by 25% in 2025, driven by investments in new corporate-owned clubs [13].

Group 1 - The article discusses the performance of Planet Fitness, Inc. (NYSE: PLNT), highlighting a previous short-term gain of approximately 30% from trading the stock [1] - The company is positioned as a house position, indicating a strong belief in its potential for future returns [1] - The article promotes a blended trading and income approach to enhance savings and retirement timelines for investors [1] Group 2 - The content encourages potential investors to try the service with a money-back guarantee, emphasizing a proven track record of high conviction ideas [2]

Membership and Club Operations - As of December 31, 2024, Planet Fitness had approximately 19.7 million members, with 82% of membership fee payments collected via ACH direct debit[22]. - The company operated 2,722 clubs system-wide as of December 31, 2024, including 2,445 franchised and 277 corporate-owned locations[23]. - PF Black Card membership penetration increased from 61% as of December 31, 2020, to 64% as of December 31, 2024, with average monthly dues per member rising from $17.01 to $19.01[1]. - Monthly membership dues start at $15 for the standard Classic Card and $24.99 for the PF Black Card, with current standard annual fees at $49[24]. - As of December 31, 2024, the company had 96 franchisee groups operating 2,445 clubs, indicating a substantial franchise network[115]. Marketing and Brand Strategy - Planet Fitness spent $88.6 million in 2024 on national marketing campaigns and local advertising, with franchisees required to contribute 2% of their gross monthly membership dues to the National Advertising Fund[1]. - The company plans to enhance its free fitness training program and provide over 500 workouts via its mobile application to attract new members[1]. - Planet Fitness aims to increase brand investment to drive awareness and growth, leveraging significant marketing expenditures from both franchisees and corporate[1]. - Franchisees in the U.S. and Canada are required to spend 7% of their monthly dues on local marketing to support branding efforts[47]. - The company has aligned with high-profile media partners, reaching over one billion TV viewers annually through sponsorships[48]. Financial Performance and Royalties - The average royalty rate for Planet Fitness was 6.6% in 2024, up from 6.3% in 2020, with only 57% of clubs paying royalties at the current franchise agreement rate[1]. - The company's financial results are heavily reliant on royalties from franchisees, which are based on a percentage of gross monthly membership dues and annual fees[115]. - Economic conditions such as recession, inflation, and decreased consumer confidence could materially harm franchisees' financial conditions, adversely affecting the company's revenues[115]. Challenges and Risks - The health club industry is highly competitive, with various fitness and non-fitness alternatives vying for consumer discretionary spending[51]. - The company and its franchisees face challenges in attracting and retaining members, which could adversely impact business operations and financial condition[91]. - The company is exposed to risks related to cybersecurity, which could disrupt operations and damage reputation if data integrity is compromised[15]. - The company must effectively respond to changing consumer preferences in health and fitness to avoid adverse impacts on business[89]. - The company faces increased risks of cybersecurity incidents due to geopolitical events, which could disrupt operations and affect member services[97]. Debt and Financial Obligations - As of December 31, 2024, the Master Issuer had approximately $2.2 billion of outstanding debt[173]. - The Master Issuer issued $575 million in Series 2018-1 Fixed Rate Senior Secured Notes and $625 million in Series 2018-1 Fixed Rate Senior Secured Notes on August 1, 2018[165]. - The company expects substantial payments under tax receivable agreements, which may affect future cash flow and operational decisions[180]. - The financial covenants may limit the ability to incur additional indebtedness in the future, intensifying existing risks[177]. - The company has significant outstanding debt, which could affect financial condition and operational results[84]. Employee and Operational Management - The company employed 3,806 employees at corporate-owned clubs and 367 employees across Corporate Support Centers as of December 31, 2024[55]. - The company emphasizes a competitive pay and benefits structure to support team members' financial, physical, and mental well-being[62]. - Competition for qualified employees is intense, and the inability to attract and retain key personnel could hinder the company's strategic objectives[112]. - The company must effectively manage growth to avoid strains on management, employees, and internal controls, which could adversely impact business operations[110]. Regulatory and Compliance Issues - Compliance with numerous laws and regulations is required, and failure to do so may result in fines, damages, and reduced royalty revenue[136]. - The company is subject to extensive regulations regarding indoor tanning services, which could harm reputation and profitability due to negative public perception[143]. - Changes in data privacy laws could impose additional costs and operational constraints, adversely affecting business models and revenue[141]. - The handling of personally identifiable information is regulated at multiple levels, and noncompliance could lead to material adverse effects on business and financial condition[103]. Strategic Growth and Expansion - The company is expanding internationally, which presents risks including inadequate brand infrastructure and political instability in foreign markets[113]. - The growth strategy is dependent on franchisees' ability to access funds for new club development, which could be adversely affected if financing is not available[107]. - The company must effectively market and promote its brand in new markets to ensure the success of new clubs, or growth may be significantly delayed[108]. - Failure to open new clubs as anticipated could hinder revenue growth and adversely affect operating income[109]. Technology and Innovation - The company utilizes a computerized club management system to track and analyze sales, membership statistics, and demographic profiles[66]. - Since 2019, the company has developed a new customized mobile application and rolled out a new in-club media solution to enhance digital experiences[96]. - The adoption of artificial intelligence technologies may require substantial resources and could impact financial performance if not managed properly[163]. Financial Volatility and Market Risks - The stock price of Class A common stock has fluctuated between $13.23 and $102.01 since the IPO, indicating potential volatility[205]. - The company’s financial forecasting may differ materially from actual results, potentially causing a decline in stock price[212]. - The company faces potential litigation costs and management distraction due to securities class action litigation following stock price volatility[209]. - Inflationary conditions may lead to increased shipping, labor, and equipment costs, impacting profitability, particularly due to minimum wage increases affecting labor costs[337].

Core Insights - Planet Fitness shares declined due to 2025 projections overshadowing a strong fourth quarter performance [1][4] - The company reported an adjusted earnings per share (EPS) of $0.70 for Q4 2024, with revenue of $340.45 million, both showing year-over-year growth and exceeding analyst expectations [1][4] Financial Performance - For Q4 2024, Planet Fitness achieved a same club sales growth of 5.5%, surpassing the anticipated 4.84% [1] - The company forecasts approximately 10% revenue growth for 2025, projecting revenue to reach about $1.3 billion, slightly above analyst consensus [2] - Adjusted EPS is expected to grow by 11% to 12%, while same club sales are projected to increase by 5% to 6% in 2025, both slightly below current analyst projections [2] Market Reaction - Following the unexpected departure of its CEO in September 2023, Planet Fitness shares have rebounded, hitting a record high in late January 2024 [3] - Despite the recent decline of over 8% in share price, it remains more than 40% higher than a year ago [3]

Financial Data and Key Metrics Changes - In Q4 2024, Planet Fitness reported a revenue growth of 19.4% year-over-year, reaching $340.5 million compared to $285.1 million in Q4 2023 [8][31] - Adjusted EBITDA increased by 14.4% to $130.8 million, with an adjusted EBITDA margin of 38.4%, down from 40.1% in the prior year [8][37] - Net income for the quarter was $47.6 million, with adjusted net income at $59.7 million, translating to an adjusted net income per diluted share of $0.70 [36] Business Line Data and Key Metrics Changes - System-wide same club sales grew by 5.5%, with franchisee same club sales increasing by 5.7% and corporate same club sales by 4.4% [8][30] - Equipment segment revenue surged by 49.2%, primarily due to higher sales of strength equipment to existing franchisee-owned clubs [33] Market Data and Key Metrics Changes - The company added 86 new clubs in Q4, totaling 150 for the year, bringing the global club count to over 2,700 [8][30] - Membership grew by 1 million in 2024, reaching approximately 19.7 million members, with black card membership penetration increasing to 64% [8][27] Company Strategy and Development Direction - The company aims to redefine its brand and enhance member experience, focusing on a balanced mix of strength equipment to meet evolving consumer needs [11][12] - Planet Fitness plans to accelerate new club openings, targeting 200 new clubs per year in the coming years, with an expectation of 160 to 170 new clubs in 2025 [20][39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the changes implemented in 2024, noting improvements in unit economics and franchisee engagement [10][11] - The leadership team emphasized a commitment to sustainable long-term growth and enhancing franchisee economics to fuel expansion [20][21] Other Important Information - The company has transitioned to a fit-for-strategy operating model to enhance accountability and responsiveness to member and franchisee needs [21][22] - Planet Fitness is maintaining an asset-lite model, with plans to own approximately 10% of its fleet while focusing on franchising [24][26] Q&A Session Summary Question: How is the price hike embedded in full-year comp and revenue guidance? - Management indicated that the classic card price increase is expected to provide a low to mid-single-digit comp lift annually after the first 12 months [49] Question: What are the trends in churn post-price hike? - Management noted that cancel rates have improved, with some members retaining the $10 classic card price, leading to a favorable churn trend [50] Question: What is the outlook for international expansion? - Management confirmed a thoughtful approach to international growth, with Spain performing well and plans to transition to a franchise model [60][62] Question: How is the black card membership performing? - There has been a notable increase in black card penetration, attributed to its perceived value compared to the classic card [70][71] Question: What are the priorities for strategic imperatives? - Key priorities include enhancing brand positioning and unit growth, supported by the new Chief Marketing Officer and Chief Development Officer [94][95]

Core Insights - Planet Fitness reported revenue of $340.45 million for the quarter ended December 2024, marking a year-over-year increase of 19.4% and exceeding the Zacks Consensus Estimate by 4.24% [1] - The earnings per share (EPS) for the same period was $0.70, up from $0.60 a year ago, representing a surprise of 12.90% over the consensus estimate of $0.62 [1] Financial Performance Metrics - Total stores at the end of the period reached 2,722, slightly above the average estimate of 2,720 [4] - Same-store sales increased by 5.5%, surpassing the estimated 4.8% [4] - Corporate-owned same-store sales were reported at 4.4%, below the estimated 4.8% [4] - New stores opened totaled 86, exceeding the estimate of 81 [4] - Franchisee-owned same-store sales grew by 5.7%, above the average estimate of 4.7% [4] Revenue Breakdown - Revenue from the national advertising fund was $19.49 million, slightly below the estimate of $19.58 million, but reflecting a year-over-year increase of 10.5% [4] - Franchise revenue was reported at $89.54 million, below the estimate of $90.60 million, with an 11.1% year-over-year increase [4] - Equipment segment revenue reached $105.12 million, significantly above the average estimate of $86.99 million, representing a 49.2% year-over-year increase [4] - Corporate-owned stores segment revenue was $126.31 million, below the estimate of $130.83 million, with an 8.5% year-over-year increase [4] - Franchise segment revenue was $109.02 million, slightly below the estimate of $109.70 million, with an 11% year-over-year increase [4] Stock Performance - Planet Fitness shares have returned -4.1% over the past month, compared to the Zacks S&P 500 composite's -1.8% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - Planet Fitness reported quarterly earnings of $0.70 per share, exceeding the Zacks Consensus Estimate of $0.62 per share, and showing an increase from $0.60 per share a year ago, resulting in an earnings surprise of 12.90% [1] - The company generated revenues of $340.45 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.24% and up from $285.09 million year-over-year [2] - Planet Fitness has consistently outperformed consensus EPS estimates over the last four quarters, achieving this four times [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.64 on revenues of $288.35 million, while for the current fiscal year, the estimate is $2.94 on revenues of $1.29 billion [7] - The estimate revisions trend for Planet Fitness is mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Leisure and Recreation Services industry, to which Planet Fitness belongs, is currently ranked in the top 20% of over 250 Zacks industries, suggesting a favorable outlook for stocks in this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]