Planet Fitness, Inc. – Value Analysis (NYSE:PLNT) : December 12, 2016

Capitalcube gives Planet Fitness, Inc. a score of 67.

Our analysis is based on comparing Planet Fitness, Inc. with the following peers – Zoom Companies Inc., Grupo Sports World SAB de CV Class S and Town Sports International Holdings, Inc. (ZMMM-US, SPORTS-MX and CLUB-US).

Investment Outlook

Planet Fitness, Inc. has a fundamental score of 67 and has a relative valuation of OVERVALUED.

Fundamental Score

Access our research and ratings on Planet Fitness, Inc.

Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • Planet Fitness, Inc. Class A currently trades at a higher Price/Book ratio (44.60) than its peer median (23.01).
  • PLNT-US outperforms its peers with a relatively high operating performance and the market also expects faster growth relative to its peers
  • PLNT-US‘s relatively high profit margins are burdened by relative asset inefficiency.
  • Changes in the company’s annual revenue and earnings are around the median among its peers.
  • Over the last five years, PLNT-US‘s return on assets has declined from above median to about median among its peers, indicating declining relative operating performance.
  • While PLNT-US‘s revenues growth has been around the peer median in recent years, the market seems to see faster growth ahead and gives its shares a higher than peer median P/E ratio.
  • PLNT-US might have enough interest coverage to take-on additional debt prudently.

Access our research and ratings on Planet Fitness, Inc.

Leverage & Liquidity

PLNT-US might have enough interest coverage to take-on additional debt.

  • While PLNT-US‘s debt to enterprise ratio of 33.61% is on the high side compared to an overall benchmark of 25% (Note: The peer median is currently 29.96%), it also enjoys a relatively high interest coverage level of 4.23x which may give the company enough financial strength to support additional debt. Thus, the company is classified as having Some Capacity to raise more debt.
  • All 3 peers for the company have an outstanding debt balance.

PLNT-US has maintained its Some Capacity profile from the recent year-end.

  • PLNT-US‘s interest coverage is upward trending and is now similar to its five-year average interest coverage of 3.94x.
  • The increase in its interest coverage to 4.23x from 3.24x (in 2015) was also accompanied by an increase in its peer median during this period to 0.72x from 0.14x.
  • PLNT-US‘s debt-EV is its lowest relative to the last five years and compares to a high of 46.72% in 2015.
  • The decrease in its debt-EV to 33.61% from 46.72% (in 2015) was also accompanied by a decrease in its peer median during this period to 29.96% from 35.66%.
  • Relative to peers, debt-EV fell 7.42 percentage points.

Access the detailed analysis for Planet Fitness, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Zoom Companies Inc. 2.43 0.01 -12.15 -52.08
Grupo Sports World SAB de CV Class S 26.32 0.34 2.13 50.54
Town Sports International Holdings, Inc. 86.47 0.85 -0.7 3.85
Planet Fitness, Inc. Class A 33.61 1.55 4.23 24.08
Peer Median 29.96 0.6 0.72 13.96
Best In Class 2.43 1.55 4.23 50.54

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Company Profile

Planet Fitness, Inc. operates and franchises 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 U. S., Puerto Rico, and Canada. The Corporate-Owned Stores segment deals with the operations with respect to all corporate-owned stores throughout the U. S. 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 Newington, NH.

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