A month has gone by since the last earnings report for Planet Fitness (
PLNT Quick Quote PLNT - Free Report) . Shares have added about 12.8% 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 drivers.
Planet Fitness Q3 Earnings & Revenues Miss Estimates
Planet Fitness reported dismal third-quarter 2020 results, wherein earnings and revenues missed the Zacks Consensus Estimate. Further, both the metrics declined sharply year over year due to the coronavirus pandemic. Owing to the uncertainty tied to the crisis, the company has withdrawn 2020 guidance.
The company reported adjusted earnings per share of 2 cents, missing the Zacks Consensus Estimate of 11 cents. In the prior-year quarter, the company had reported adjusted earnings per share of 36 cents.
Quarterly revenues of $105.4 million lagged the consensus mark of $107 million. The top line also declined 36.8% from the year-ago quarter primarily due to the dismal performance across Franchise, Corporate-owned Stores and Equipment segments. Franchise revenues fell 10.4% year over year to $59.8 million. The Corporate-owned Stores segment’s revenues declined 30.6% year over year to $28.3 million. In the Equipment segment, revenues plunged 70.8% year over year to $17.3 million on account of lower equipment sales to new and existing franchisee-owned stores. Moreover, EBITDA in the Franchise segment declined 29.8% year over year to $3.11 million. The decline was primarily attributed to temporary shutdowns owing to COVID-19 and decline in membership levels. At the Corporate-owned stores segment, EBITDA fell 66% year over year to $5.7 million. EBITDA in the Equipment segment slumped 83.5% year over year to $2.3 million. Total adjusted EBITDA at the end of the third quarter deteriorated to $32 million from $65.7 million in the year-ago quarter. Other Financial Details
As of Sep 30, 2020, cash and cash equivalents totaled $419.7 million compared with $436.3 million as of Dec 31, 2019. Long-term debt, net of current maturities, amounted to $1,679.2 million at the end of third-quarter 2020 compared with $1,687.5 million at 2019-end.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -21.16% due to these changes.
At this time, Planet Fitness has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, 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.
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.