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Bear of the Day: Planet Fitness (PLNT)

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Planet Fitness (PLNT - Free Report) is a popular fitness center chain with a domestic and international presence. It currently operates over 2,000 locations throughout the U.S., Puerto Rico, Canada, the Dominican Republic, Panama, Mexico, and Australia.

Q4 Earnings Recap

Back in February, Planet Fitness reported disappointing results for its fiscal fourth quarter.

Revenue dropped 30% year-over-year and system-wide same-store sales decreased 10.6%. As seen in the report, the Covid-19 pandemic continues to take a toll on PLNT’s business and the broader fitness industry.

Q4 franchise segment revenue fell 8.8% due to temporary store closures and reduced membership levels, while adjusted EBITDA declined 33.3% to $51.1 million.

“While we anticipate the operating environment to remain volatile and unit growth to be modest in the near-term, we are increasingly optimistic about our growth opportunities as the vaccine continues to rollout and consumers increasingly return to daily activities, such as bricks and mortar fitness," said CEO Chris Rondeau.

PLNT did not provide a full-year outlook for 2021 due to the pandemic-related uncertainty.

Bottom Line

PLNT is now a Zacks Rank #5 (Strong Sell).

11 analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen 45 cents to $1.10 per share; earnings and sales are expected to see significant year-over-year gains for fiscal 2021, though that’s to be expected after the losses faced in 2020.

Shares are up only 7.2% in the past one-year period compared to the S&P 500’s gain of 23%.

With the vaccine rollout speeding up, an economic rebound is within reach. But that doesn’t mean everything will bounce back at once. Planet Fitness still has a hard road ahead of it to get back to pre-pandemic growth, so investors may want to stay on the sidelines until the return to long-term growth appears.

Investors who are interested in adding a leisure and recreation stock to their portfolio could consider RV maker Camping World (CWH - Free Report) . CHW is a #2 (Buy) on the Zacks Rank, with long-term earnings growth of 34.7% for the next three to five years.

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