The inclusive fitness company (NYSE:PLNT) reported revenue ahead of Wall Street expectations in Q3 CY2024, with sales rising 5.3% year over year to $292.2 million. Its GAAP profit of $0.50 per share was also 9.3% above analysts’ consensus estimates.
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Amount: $292.2 million vs analyst estimates of $285.3 million (2.5% beat)
EPS: $0.50 vs analyst estimates of $0.46 (a 9.3% beat)
EVENTS: $123.1 million vs. analyst estimates of $117 million (5.2% beat)
Gross Margin (GAAP): 59.9%, up from 57.9% in the same quarter last year
Area of Operation: 27.8%, up from 26.1% in the same quarter last year
EBITDA Margin: 42.1%, up from 40.3% in the same quarter last year
Free Cash Flow: 26.7%, up from 25.3% in the same quarter last year
One Store Sales up 4.3% year-on-year (8.4% in the same quarter last year)
Market Capitalization: $7.16 billion
“We delivered solid results in the quarter, including revenue growth of over 5 percent, revenue growth of nearly 3 percent and EBITDA growth of nearly 10 percent, and we are raising our outlook for targets certain financial milestones,” said Colleen Keating, Chief Executive Officer. .
Founded by two brothers who bought a struggling gym, Planet Fitness (NYSE:PLNT) is a fitness center that helps gym users by providing a friendly and inclusive atmosphere.
Resort companies often sell experiences rather than tangible products, and over the past decade, consumers have gradually shifted their spending from “things” to “experiences”. Resorts want to make a profit but they have to innovate to do so because of the industry’s high competition and financial pressures.
A company’s long-term performance can reflect its business value. Any business can put up a good quarter or two, but many that last grow over the years. Sadly, Planet Fitness’ sales grew at a chilly 10.9% compounded annual growth rate over the past five years. This indicates that it has failed to grow in any significant way, a difficult starting point for our analysis.
Planet Fitness Total Income
We at StockStory put a lot of emphasis on long-term growth, but at the discretion of clients, a broader historical view can miss a company with a successful new product or emerging trend. Planet Fitness’ annual growth of 15.9% over the past two years is above its five-year trend, suggesting bright spots. Note that COVID hurt Planet Fitness’ business in 2020 and part of 2021, and it bounced back significantly after that.
Planet Fitness Year-over-Year Revenue Growth
We can better understand a company’s revenue strength by analyzing its same-store sales, which show how much its established locations are generating. Over the past two years, Planet Fitness’ same-store sales increased 7.3% year-over-year. Because this number is lower than its revenue growth, we can see the opening of new locations to strengthen the company’s core performance.
This quarter, Planet Fitness reported annual revenue growth of 5.3%, and its revenue of $292.2 million beat Wall Street estimates by 2.5%.
Looking ahead, sell-side analysts expect revenue to grow 8.7% over the next 12 months, a decline compared to the previous two years. This estimate does not please us and shows that the market thinks that its products and services will face some problems.
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Although earnings are important for evaluating a company’s performance, we believe that cash is king because you cannot use accounting profits to pay debts.
Planet Fitness has demonstrated strong cash flow, which gives it an advantage over its competitors and the ability to invest or return money to investors. The company’s free cash flow was 17.8% over the past two years, which is pretty good for a consumer discretionary business.
Planet Fitness Free Cash Flow Margin
Planet Fitness’ free cash flow came in at $78.17 million in Q3, which equates to a 26.7% margin. This result was good as its margin was 1.5 percent higher than in the same quarter last year, but we would not read too much in the short term because the investment needs could be seasons, which lead to temporary changes. Long-term traditions have greater meaning.
Next year, analysts predict that Planet Fitness’ revenue will fall slightly. Their consensus estimates mean that the free cash flow margin of 17.2% in the last 12 months will decrease to 15.6%.
It was great to see Planet Fitness beat analysts’ revenue, EPS, and EBITDA expectations this quarter. Overall, this quarter had some positive highlights. The stock traded down 6.5% to $90 immediately after the report.
Planet Fitness produces solid earnings, but one quarter doesn’t make the stock a buy. Let’s see if this is a good investment. The latest quarter matters, but not nearly as much as long-term fundamentals and values, when deciding whether a stock is worth buying. We cover that in our full research report which you can read here, it’s free.
