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PLNT Stock Rises 14% in 3 Months: Is it Time to Buy or Hold?
PLNTPlanet Fitness(PLNT) ZACKS·2024-09-16 13:50

Core Viewpoint - Planet Fitness, Inc. (PLNT) has shown strong stock performance, gaining 14.4% over the past three months, significantly outperforming the Zacks Leisure and Recreation Services industry and broader market indices [1][2] Group 1: Financial Performance and Market Position - PLNT's stock is currently trading at 82.39,aboveits50−daymovingaverageof82.39, above its 50-day moving average of 77.50 and 200-day moving average of 69.42,indicatingpositivemarketperception[2]−Thecompanyhasaforward12−monthprice−to−earningsratioof30.24X,whichishigherthantheindustryaverageof16.22X,suggestingapremiumvaluation[9]−TheZacksConsensusEstimateforPLNT′s2024earningspershare(EPS)hasincreasedfrom69.42, indicating positive market perception [2] - The company has a forward 12-month price-to-earnings ratio of 30.24X, which is higher than the industry average of 16.22X, suggesting a premium valuation [9] - The Zacks Consensus Estimate for PLNT's 2024 earnings per share (EPS) has increased from 2.43 to 2.44overthepast60days,withasimilarupwardtrendfor2025EPSfrom2.44 over the past 60 days, with a similar upward trend for 2025 EPS from 2.83 to 2.84[10][11]Group2:BusinessModelandGrowthStrategies−PlanetFitnessdifferentiatesitselfinthehigh−value,low−price(HVLP)sectorbycreatinganinclusivememberexperience,supportedbyits"nogymtimidation"philosophy[3]−Thecompanyhasimplementeda2.84 [10][11] Group 2: Business Model and Growth Strategies - Planet Fitness differentiates itself in the high-value, low-price (HVLP) sector by creating an inclusive member experience, supported by its "no gymtimidation" philosophy [3] - The company has implemented a 15 pricing structure for new classic card members, expected to contribute to a low to mid-single-digit increase in average unit volume (AUV) over the next year [4] - The asset-light franchise model generates substantial free cash flow, allowing for continued investment in growth initiatives and shareholder returns [6] Group 3: Expansion and Market Opportunities - Planet Fitness is expanding internationally, with its first European location opened in Barcelona, indicating potential for growth in high-density population areas [6] - The High School Summer Pass Program has attracted over 2.6 million teen participants, emphasizing the company's commitment to community and long-term membership growth [3] Group 4: Challenges and Risks - The company recently refinanced 600millionofdebt,increasingitstotaldebtto600 million of debt, increasing its total debt to 800 million, which raised concerns about its ability to manage debt obligations amid economic downturns [7] - Equipment sales have seen a decline, with a year-over-year drop of 8.4% in the second quarter, which could impact overall performance if store openings do not meet expectations [8]