Planet Fitness Inc: Bull/Bear Discussion
Planet Fitness Inc
Consumer
05/21/2020
Presented
| Date | 05/19/2020 |
| Price | $57.54 |
| Market Cap | $4.60B |
| Ent Value | $5.21B |
| P/E Ratio | 48.33x |
| Book Value | N/A |
| Div Yield | 0% |
| Shares O/S | 79.95M |
| Ave Daily Vol | 3,253,974 |
| Short Int | 11.78% |
Current
| Price | $82.77 |
| Market Cap | $7.00B |
| Planet Fitness, Inc. engages in the operation and franchising of fitness centers. It operates through the following segments: Franchise, Corporate-Owned Stores, and Equipment. The Franchise segment includes operations related to the company's franchising business in the United States, Puerto Rico, Canada, the Dominican Republic, Panama, Mexico, and Australia. The Corporate-Owned Stores segment comprises operations with respect to all Corporate-owned stores throughout the United States and Canada. The Equipment segment sells equipment to franchisee-owned stores. The company was founded by Michael Grondahl and Marc Grondahl in 1992 and is headquartered in Hampton, NH. |
Publicly traded companies mentioned herein: Peloton Interactive Inc (PTON), Planet Fitness Inc (PLNT)
Highlights
On May 19th, 2020, DeMatteo Research hosted a bull/bear discussion on Planet Fitness Inc (PLNT). The group shared a wide range of opinions on churn, reopenings, access to capital, member growth, competition, and macroeconomic concerns, among other topics. A bullish participant believes that PLNT should be able to return to its pre-COVID-19 earnings trajectory by 2022, assuming consumer behavior normalizes once there is a vaccine available.
A bearish participant discussed his long-term concerns including worsening lease economics, gym density/penetration, and PLNT’s poor public perception. However, in the near term his research indicates that net additions are flat in states that have started to reopen like Georgia and Utah.
Overall, the group seemed to be in agreement that the short-term bear case is mainly focused on data as locations reopen. One bullish participant indicated that if churn increases more than expected and there is a sharp decline in member count, it would cause him to reevaluate his position.
Bull Case
One of the more bullish participants believes that by 2022, PLNT should be able to generate ~$2.50 in earnings. Applying a 30x multiple, which he views as reasonable given the low rate environment and PLNT’s franchise model, to that ~$2.50 in earnings he attains a price target of $75/share or ~30% upside over the next 18 months.
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