Planet Fitness, Inc. PLNT has been benefiting from robust digitalization, strategic efforts and a solid brand presence. The company is optimistic about growth opportunities in 2022. In the past year, the company’s shares have gained 8.2%, against the industry’s decline of 10%.
Key Growth Drivers
Apart from attracting new members to its brand, engaging existing members via its mobile app is a priority. The company intends to achieve this by focusing on driving downloads, app usage and enhanced functionality such as referral incentives, in-app messaging, notifications and improved account management tools. Features such as upgrades from the classic white card membership to the black card are an opportunity to drive rates.
Given solid customer engagement in its fitness content, the company is currently testing a digital-only subscription membership for $5.99/month through its mobile app “PF plus.” Through this, the company intends to provide more premium content apart from the free content, which is already available. This includes live daily workouts, digital fitness classes (accessible through home and gym) and aggressive workout series to help customers advance over time. Markedly, with this initiative, Planet Fitness is optimistic regarding the future conversion of non-members as well. During fourth-quarter 2021, the company initiated PF+ in 100 stores to test the price elasticity for both its Classic and Black Card memberships. The company witnessed higher member participation with respect to its core bricks-and-mortar offerings.
Planet Fitness is one of the largest and fastest-growing franchisors as well as operators of fitness centers in the United States. To bolster its presence in Mexico, the company announced a joint venture with a prominent local retail services company and one of its largest U.S. developers. The agreement intends to develop a minimum of 80 new stores over the next five years. Given the growth potential courtesy of changing market dynamics and tailwinds related to health and wellness, the company remains optimistic regarding a 4,000-plus domestic store opportunity in the long term. As of Dec 31, 2021, the company had approximately 15.2 million members and 2,254 stores in 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico and Australia.
For 2022, the company expects revenues to increase in the mid-50% range over 2021 levels. Adjusted EBITDA for 2022 is estimated to increase in the high-50% range, while adjusted net income is anticipated at the low-90% range over 2021 levels. It anticipates adjusted EPS to increase in the mid-80% range over 2021 levels. The metrics are based on the assumption of potential impact from the Sunshine Fitness acquisition and that there is no significant worsening of the COVID-19 pandemic.
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Zacks Rank & Key Picks
Planet Fitness currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Consumer Discretionary sector are Funko, Inc. FNKO, JAKKS Pacific, Inc. JAKK and Bluegreen Vacations Holding Corporation BVH.
Funko sports a Zacks Rank #1 at present. FNKO has a trailing four-quarter earnings surprise of 96.2%, on average. Shares of the company have declined 10% in the past year.
The Zacks Consensus Estimate for Funko’s current financial-year sales and EPS (earnings per share) suggests growth of 22.7% and 26.8%, respectively, from the year-ago period’s reported levels.
JAKKS Pacific presently sports a Zacks Rank #1. JAKK has a trailing four-quarter earnings surprise of 63.1%, on average. Shares of the company have soared 115% in the past year.
The Zacks Consensus Estimate for JAKK’s current financial-year sales and EPS indicates growth of 4.4% and 8.5%, respectively, from the year-ago period’s reported levels.
Bluegreen Vacations presently carries a Zacks Rank #2 (Buy). BVH has a trailing four-quarter earnings surprise of 425.1%, on average. The stock has surged 63.2% in the past year.
The Zacks Consensus Estimate for BVH’s current financial-year sales and EPS indicates growth of 8.3% and 20.8%, respectively, from the year-ago period’s reported levels.
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