Planet Fitness, Inc. PLNT unveiled a new three-year financial target. Per the recent SEC filing, the company expects revenues to grow in low-to-mid teens and adjusted EBITDA growth in high teens. Adjusted EPS is projected to grow in low-to-mid 20% range.
Shares of the company slipped 0.13% on Jun 7 and declined 14.4% in the year-to-date period against the industry's growth of 24%. The downside was primarily caused by inflationary pressures.
This leading franchisor and operator of fitness centers posted unimpressive results in the first quarter of 2023, where earnings and revenues missed the Zacks Consensus Estimate. The company’s total operating costs and expenses came in at $170.1 million compared with $138 million reported in the prior-year quarter. The company is cautious about the increased cost of construction and interest rates. For 2023, our model predicts total operating costs to rise 13.6% year over year.
Nonetheless, it has been benefiting from solid performances in Franchise and Corporate-owned stores. Also, Planet Fitness has been focusing on strategic partnerships, international expansions and digitalization. The company stated that it transitioned from 16 marketing agencies to one (Publicis Groupe) to fuel incremental member growth. Consistent with the advertising strategy (covering national and local levels), the transition paves the path for lower media costs along with solid member acquisition.
During the first quarter of 2023, the company reported solid membership conversions on the back of its marketing and promotional offers. Also, it stated that it had outpaced 2019 levels. During the quarter, membership levels came in at 18.1 million compared with 16.6 million in the previous quarter. Going forward, the company expects regularized joining trends and seasonality to continue.
For 2023, the company expects revenues to increase in the 13%-14% range year over year. Adjusted EBITDA for 2023 is estimated to rise in the range of 17%-18% year over year. Adjusted net income is anticipated to rise 30-33% compared with 2022 results. The company expects adjusted EPS to increase in the 33%-36% range year over year. The metrics are based on the assumption that there is no significant impact of the COVID-19 pandemic on membership counts and no potential supply chain disruptions.
Zacks Rank & Key Picks
Planet Fitness currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are:
Royal Caribbean Cruises Ltd. RCL sports a Zacks Rank #1 (Strong Buy). RCL has a trailing four-quarter earnings surprise of 26.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 48.5% and 162.8%, respectively, from the year-ago period’s levels.
Trip.com Group Limited TCOM flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 153.1%, on average.
The Zacks Consensus Estimate for TCOM’s 2023 sales and EPS indicates a rise of 76.9% and 334.5%, respectively, from the year-ago period’s levels.
Skechers U.S.A., Inc. SKX sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 18.8%, on average.
The Zacks Consensus Estimate for SKX’s 2023 sales and EPS indicates a rise of 7.8% and 31.9%, respectively, from the year-ago period’s levels.
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