Back to top

Image: Bigstock

Why Is Planet Fitness (PLNT) Down 7.1% Since Last Earnings Report?

Read MoreHide Full Article

It has been about a month since the last earnings report for Planet Fitness (PLNT - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Planet Fitness due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Planet Fitness Q2 Earnings & Revenues Beat Estimates

Planet Fitness reported second-quarter 2019 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. With this, earnings outpaced the consensus mark for the seventeenth straight quarter. Notably, both the top and bottom line registered an improvement on a year-over-year basis. Quarterly results were driven by robust system-wide same-store sales growth as well as 53 store openings.

Adjusted earnings came in at 45 cents per share, which outpaced the consensus estimate of 41 cents. The bottom line also increased 32.4% on a year-over-year basis.

Meanwhile, revenues of $181.7 million surpassed the Zacks Consensus Estimate of $168 million and surged 29.3% 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 increased 8.8% in the quarter under review.

Franchise revenues increased 23.5% to $71.8 million and the Corporate-owned Stores segment’s revenues surged 15.9% year over year to $39.7 million. At the Equipment segment, revenues rose 45.7% to $70.2 million owing to a rise in equipment sales to new stores and also sales of replacement equipment.

Moreover, EBITDA at the Franchise segment improved 24.5% to $49.9 million owing to a rise in royalties from new franchised stores and increase in same-store sales. At the Corporate-owned stores and Equipment segments, EBITDA increased 23.7% and 46.4% to $18.1 million and $16.8 million, respectively.

Total adjusted EBITDA at the end of the second quarter rose to $76.5 million from $58.4 million.

Other Financial Details

As of Jun 30, 2019, cash and cash equivalents totaled $330.6 million compared with $289.4 million as of Dec 31, 2018. Long-term debt, net of current maturities, summed $1,156.8 million at the end of second-quarter 2019 compared with $1,160.1 million at 2018 end.

2019 Outlook

For 2019, Planet Fitness expects revenue growth of nearly 18% year over year compared with the prior estimate of 15% improvement. System-wide same-store sales are likely to increase by nearly 8% compared with the prior estimate of high-single digits.

Furthermore, the company anticipates adjusted net income and earnings per share to increase nearly 20% in the current year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

At this time, Planet Fitness has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the lowest 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

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Planet Fitness has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Planet Fitness, Inc. (PLNT) - free report >>

Published in