February 28, 2018

PLNT – Strong fundamental tailwinds and positive management sentiment suggest market expectations for PLNT are far too bearish, and upside remains warranted


    • Planet Fitness (PLNT:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 15.6x Uniform P/E, implying bearish expectations for the firm. However, management is confident about their technology and franchise agreements, implying longer-term outperformance is likely, particularly in light of the firm’s robust profitability and franchising growth strategy
    • Specifically, management is confident in their opportunity to develop personalized recommendations based on consumers’ history and progress, and that the business will continue to improve millions of people’s lives each and every day during 2018. Additionally, they are confident that 900 stores have amended their existing franchise agreements at higher royalty rates, and in their plans to have the technological infrastructure and plumbing in place so they have the ability to link up to APIs, whether that be through another app or a loyalty company program. Long-term expectations are therefore far too bearish, and, should the firm execute on its growth strategy and simply maintain Uniform ROA at current levels, further equity upside for PLNT remains warranted

click here to read more (registration required)