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Planet Fitness (PLNT) Up on Q3 Earnings Beat & Upbeat View

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Planet Fitness, Inc. (PLNT - Free Report) reported third-quarter 2019 results, with earnings and revenues surpassing the Zacks Consensus Estimate. With this, earnings outpaced the consensus mark for the eighteenth straight quarter.

Notably, the top and the 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 41 store openings. Following the results, the company’s shares increased 7.4% in after-hour trading session on Nov 7. In fact, year to date, the company’s shares have gained 16.9% against the industry’s decline of 0.3%.

Adjusted earnings came in at 36 cents per share, which outpaced the consensus mark by a penny. The bottom line also increased 28.6% on a year-over-year basis.

Meanwhile, revenues of $166.8 million surpassed the Zacks Consensus Estimate of $162 million and surged 22.1% on a year-over-year basis. The top line was driven by sharp increase in the franchise, corporate-owned stores and equipment revenues. System-wide same-store sales increased 7.9% year over year in the quarter under review.

Franchise revenues increased 21.7% to $66.7 million and the Corporate-owned Stores segment’s revenues surged 15.1% year over year to $40.7 million. In the Equipment segment, revenues rose 27.9% to $59.4 million owing to a rise in equipment sales to new stores and sales of replacement equipment.

Moreover, EBITDA in the Franchise segment improved 19.6% to $44.3 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 9.9% and 42.3% to $16.8 million and $13.7 million, respectively.

Total adjusted EBITDA at the end of the third quarter rose to $65.7 million from $58.8 million in the year-ago quarter.

Planet Fitness, Inc. Price, Consensus and EPS Surprise

 

 

Other Financial Details

As of Sep 30, 2019, cash and cash equivalents totaled $219.8 million compared with $289.4 million as of Dec 31, 2018. Long-term debt, net of current maturities, amounted to $1,155 million at the end of third-quarter 2019 compared with $1,160.1 million at 2018 end.

2019 Outlook

For 2019, Planet Fitness expects revenue growth of nearly 19% year over year compared with the prior estimate of 18% rise. System-wide same-store sales are likely to increase nearly 8.6% compared with the prior estimate of 8%.

Furthermore, the company anticipates adjusted net income and earnings per share to increase nearly 21% in the current year, up from the previous estimate of 20%.

Zacks Rank & Stocks to Consider

Planet Fitness has a Zacks Rank #4 (Sell).

Better-ranked stocks worth considering in the same space include WW International, Inc (WW - Free Report) , Twin River Worldwide Holdings, Inc (TRWH - Free Report) and Callaway Golf Company (ELY - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

WW International has an impressive long-term earnings growth rate of 15%.

Shares of Twin River Worldwide Holdings have gained 11.8% in the past month.

Callaway Golf has reported better-than-expected earnings in three out of trailing four quarters, the average being 33.3%.

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