PLNT - Embedded Expectations Analysis - 2021 07 01
Planet Fitness, Inc. (PLNT:USA) currently trades above historical averages relative to UAFRS-based (Uniform) earnings, with a 42.5x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about member retention rates, advertising capabilities, and gym reopening performanceSpecifically, management may lack confidence in their ability to increase their member retention rate, mitigate declines in equipment sales, and improve their adjusted EBITDA. Furthermore, they have concerns about the impact of waiving annual fees, the potential of their advertising campaigns, and the status of area development agreements with franchisees. Moreover, management may lack confidence in their ability to stay ahead of low-cost competitors, continue recovering to pre-pandemic levels, and capitalize on real estate opportunities. They may also have concerns about the sustainability of franchisee reopening performance, the pace of gym reopening in Canada, and the impact of seasonality on their sales cadence. Finally, management may lack confidence in their ability to provide better services and guidance to customers, maintain high levels of sanitation across gyms, and expand their gym presence
Planet Fitness is a holding company. Through its subsidiries, the company is engaged as a franchisor and operator of fitness centers. The company's stores include co-branded cardio equipment, free weights, strength machines, a workout area, a small retail area and a drink cooler. The company operates and manages its business in three business segments: Franchise, which includes operations related to its franchising business in the U.S., Puerto Rico, Canada, the Dominican Republic and Panama; Corporate-owned stores, which includes operations with respect to all corporate-owned stores throughout the U.S. and Canada; and Equipment, which includes the sale of equipment to franchisee-owned stores in the U.S.
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