Planet Fitness Tumbles 11% in 3 Months: Buy the Dip or Fold?

Core Viewpoint - Planet Fitness, Inc. (PLNT) has experienced a 10.7% decline in share price over the past three months, yet it has outperformed the Zacks Leisure and Recreation Services industry, the broader Zacks Consumer Discretionary sector, and the S&P 500 during the same period [1][3]. Group 1: Company Performance - Despite the decline, PLNT stock has outperformed competitors such as Xponential Fitness, OneSpaWorld, and Peloton, which saw declines of 52.2%, 20.1%, and 43.6% respectively [4]. - The company has approximately 19.7 million members and operates 2,722 clubs across various regions, including the U.S., Canada, and parts of Europe and Latin America [6]. - PLNT has enacted several in-house initiatives aimed at gaining market share, optimizing costs, and increasing cash flow to mitigate adverse market impacts [6][19]. Group 2: Growth Strategies - The company introduced a new economic growth model in 2024, focusing on reduced build costs and extended capital investment timelines to enhance returns from new stores [7]. - PLNT has successfully integrated pricing trials into its operations, with the Classic Card membership priced at $15, and ongoing trials for the premium Black Card membership expected to conclude in Q1 2025 [8]. - The company plans to open 160-170 new clubs in 2025, building on the 150 new club openings reported in 2024 [9]. Group 3: Financial Outlook - Earnings estimates for 2025 have increased by 0.3% over the past week, with a projected year-over-year growth rate of 12.4% for 2025 earnings [10]. - The current earnings per share (EPS) estimates for 2025 stand at $2.91, with a projected increase to $3.41 in 2026 [11]. - PLNT is currently trading at a premium compared to industry peers, indicating strong market potential despite the challenges faced [13][15]. Group 4: Challenges and Risks - The company is facing pressures from elevated costs due to inflation and global macroeconomic risks, which have led to a 7.4% year-over-year increase in total operating costs to $857.5 million in 2024 [5][20]. - The uncertain global market scenario, including newly levied tariffs and potential foreign exchange risks, poses additional challenges for PLNT [16][18].