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Planet Fitness (PLNT) Up 0.3% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Planet Fitness (PLNT - Free Report) . Shares have added about 0.3% 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 Q1 Earnings Top, Revenues Lag Estimates

Planet Fitness reported mixed first-quarter 2019 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues marginally missed the same. However, both the top and bottom lines increased on a year-over-year basis. Results in the quarter were driven by robust system-wide same-store sales growth as well as 65 new store openings.

Adjusted earnings came in at 35 cents per share, which outpaced the consensus estimate by a penny. The bottom line also increased 29.6% on a year-over-year basis. Notably, this marked the company’s seventh straight quarter of earnings beat.

Meanwhile, revenues of $148.8 million marginally lagged the Zacks Consensus Estimate of $153 million but surged 22.7% on a year-over-year basis. The top line was driven by a sharp increase in the franchise, corporate-owned stores and equipment revenues. System-wide same-store sales rose 10.2%.

Franchise revenues increased 20.4% to $65.8 million, whereas the Corporate-owned Stores segment’s revenues surged 16.3% year over year to $38 million. The Equipment segment revenues rose 32.3% to $45 million owing to a rise in equipment sales to new stores.

Moreover, EBITDA at the Franchise segment improved 29.1% to $47.4 million owing to a rise in royalties from new franchised stores. At the Corporate-owned stores and Equipment segments, EBITDA increased 27.9% and 39.3% to $15.6 million and $10.4 million, respectively.

Total adjusted EBITDA at the end of the first quarter rose to $63.4 million from $48.8 million.

Other Financial Details

As of Mar 31, 2019, cash and cash equivalents totaled $336 million compared with $289.4 million as of Dec 31, 2018. Long-term debt, net of current maturities, summed $ 1,158.5 million at the end of first-quarter 2019 compared with $1,160.1 million at 2018 end.

2019 Outlook

Planet Fitness continues to expect revenue growth of nearly 15% year over year in 2019. System-wide same-store sales are likely to increase in high-single digits. The company expects adjusted net income and earnings per share to increase 18% and 25%, respectively.

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months.

VGM Scores

Currently, Planet Fitness has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

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

Outlook

Planet Fitness has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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