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Planet Fitness (PLNT) Outruns Peers, Surges 44% in 6 Months

Zacks Equity Research

In an intensely competitive Leisure and Recreation Services industry, Planet Fitness, Inc. PLNT has done exceedingly well and emerged as an attractive investment option. This is quite evident from its share price performance in the past six months. The stock has surged 44% against the industry’s 5.2% decline.

We believe there is still momentum left in this Zacks Rank #2 (Buy) company. This is because the company has an expected long-term earnings growth rate of 18.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks such as Live Nation Entertainment, Inc. LYV, Lindblad Expeditions Holdings, Inc. LIND and International Speedway Corporation ISCA, which belong to the same industry, have also gained 24%, 8.4% and 18.4%, respectively, in the past six months.

Let’s delve deeper and find out the reason that kept Planet Fitness ahead of its peers.

Key Catalysts

In an effort to expand its presence globally, Planet Fitness has been focusing on strategic partnerships and international expansions. Recently, the company announced its strategic partnership with Kohl’s. Per the terms of the agreement, Planet Fitness can open stores adjacent to select Kohl’s stores. In 2019, Planet Fitness intends to open up to 10 stores adjacent to select Kohl's retail locations across the country. This apart, the company’s existing franchisees have signed agreements to open 1,000 more gyms. Planet Fitness expects almost half of these gyms to be opened within the coming three years.

Planet Fitness is one of the largest and fastest growing franchisors as well as operators of fitness centers in the United States. As of Dec 31, 2018, the company had above 12.5 million members and 1,742 stores in all 50 states. It is also committed to open more 1,000 stores under prevailing area developments agreements. In 2018, Planet Fitness opened 230 new stores (226 franchise stores and 4 corporate stores). The company has stores in the United States, Puerto Rico, Canada, Dominican Republic, Panama and Mexico.

Moreover, Planet Fitness’ same-store sales growth is impressive. During fourth-quarter 2018, the company posted 40th straight quarter of positive same-store sales. In the first, second, third and fourth quarter of 2018, same-store sales increased 11.1%, 10.2%, 9.7% and 10.1%, respectively. In first, second, third and fourth quarter of 2017, comps increased 11.1%, 9%, 9.3% and 11.6% each. Increase in net member and higher average royalty rate has been driving comparable sales higher. Moreover, increased Black Card pricing bodes well.

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Planet Fitness, Inc. (PLNT) : Free Stock Analysis Report
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