Buy Signal on Planet Fitness (PLNT-US)
Our système also triggered an Enter Long Tactical signal on December 23, suggesting a bullish acceleration. Planet Fitness has a rather solid track record, with a Behavioral score of 6/10, therefore the bullish signal is to be considered as mainly Strategic.
Planet Fitness is a $ 7.5 Bn market cap franchisor and operator of fitness centers in the United States. The Company operates through three 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, the Dominican Republic and Canada. The Corporate-owned stores segment includes operations with respect to all corporate-owned stores throughout the United States and Canada. The Equipment segment includes the sale of equipment to franchisee-owned stores. The company has approximately 13.5 million members and 1806 stores in 50 states, the District of Columbia, Puerto Rico, Canada and the Dominican Republic.
The fitness industry is expected to encounter strong post-pandemic growth at a CAGR of 7.7% annually until 2024 . PLNT's brand, marketing, emphasis on inclusion, store growth, and low fees should all help the company grow revenues significantly faster. PLNT has shown it can expect faster growth, as it currently has 13.5 million members as of December 31, 2020, compared to 8.9 million as of December 31, 2016, reflecting a CAGR of 10.9%.
As pandemic restrictions loosen, gym-goers and new members are likely to pick up physical activity in more public settings, especially in the low-income areas PLNT targets. Furthermore, Planet Fitness's digital investments are paying off in attracting these new customers. 65-70% of new members joined digitally in 2021 compared to 30-35% in 2019.Franchisees have committed to open 1,000 stores (500 over the next 3 years), and over 90% of 2020 new stores are from existing franchisees, indicating strong relationships between franchisees and the company.
Management's long-term goal of 4,000+ stores looks to be reasonable. For 2021, the company is expected to post a $ 576 m revenue (+42% y/y) coupled with a 29% operating margin. In 2022, revenue is expected at $768 m (+33% y/y) coupled with a 33.5% margin. EPS growth is expected to more than double in 2022 and grow by more than 30% in 2023, justifying strong multiples.
Short term catalyst : reopening of the economy, new stores.
This signal looks consistent with the « reopening trade » theme currently in bullish momentum.