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Planet Fitness (PLNT) Up 24.1% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Planet Fitness (PLNT - Free Report) . Shares have added about 24.1% 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.

Planet Fitness Q2 Earnings Miss Estimates, Fall Y/Y

Planet Fitness reported dismal second-quarter 2020 results, wherein earnings and revenues missed the Zacks Consensus Estimate. Moreover, the top and the bottom lines declined sharply year over year owing to the coronavirus pandemic.

Owing to the uncertainty tied to the crisis, the company has withdrawn its 2020 guidance.

Quarterly Details

The company reported adjusted loss per share of 32 cents, wider than the Zacks Consensus Estimate of a loss of 17 cents. In the prior-year quarter, the company had reported adjusted earnings per share of 45 cents.

Quarterly revenues of $40.2 million missed the consensus mark of $43.3 million by 2.5%. The top line also declined 77.9% from the year-ago quarter primarily due to the dismal performance across Franchise, Corporate-owned Stores and Equipment segments.

Franchise revenues fell 70.8% year over year to $21 million. The Corporate-owned Stores segment’s revenues declined 76.3% year over year to $9.4 million. In the Equipment segment, revenues declined 86% year over year to $9.8 million owing to lower equipment sales to new and existing franchisee-owned stores.

Moreover, EBITDA in the Franchise segment declined 92.9% year over year to $3.5 million. The decline was primarily attributed to temporary shutdowns owing to COVID-19. At the Corporate-owned stores segment, EBITDA fell 135% year over year to ($6.3) million. EBITDA in the Equipment segment declined 92.2% year over year to $1.3 million.

Total adjusted EBITDA at the end of the second quarter deteriorated to ($9.3) million from $76.5 million in the year-ago quarter.

Other Financial Details

As of Jun 30, 2020, cash and cash equivalents totaled $423.6 million compared with $436.3 million as of Dec 31, 2019. Long-term debt, net of current maturities, amounted to $1,682 million at the end of second-quarter 2020 compared with $1,687.5 million at 2019-end.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -49.35% due to these changes.

VGM Scores

Currently, Planet Fitness has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Planet Fitness has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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