Hot IBD 50 stock Planet Fitness (PLNT) reported its third straight quarter of accelerating earnings growth late Thursday. Planet Fitness stock, which has boomed on "judgement free" gyms with low membership fees, soared to a record high Friday morning, clearing a rare, bullish base.
XPlanet Fitness Earnings
Estimates: Wall Street expected Planet Fitness earnings to pump up 41% to 31 cents, according to Zacks Investment Research. Revenue was seen swelling 21% to $130 million.
Results: Planet Fitness earnings jumped 54.5% to 34 cents a share. Sales grew 31% to 140.6 million. Same-store sales rose 10.2%.
Outlook: The gym operator sees 2018 revenue rising 26%, with systemwide comp growth of 9%-10%. Planet Fitness sees earnings rising 33% for the year.
The company also raised its stock buyback program to $500 million.
Planet Fitness Stock Hits New High
Stock: Planet Fitness stock jumped 9.3% to 53.33 in morning trading on the stock market today, hitting a new high. Shares cleared a rare ascending base with a 91.83 buy point. The ascending base is rare but often powerful. However, the ascending base often stands out when the broader stock market is moving sideways or declin. Planet Fitness stock's ascending base looks a lot like the Nasdaq's choppy rise.
Planet Fitness stock boasts excellent fundamentals, which is reflected in its IBD Composite Rating of 96. In addition, it currently leads the Leisure-Services industry group.
Analysts Pumped About Planet Fitness
William Blair partner Sharon Zackfia wrote in a pre-earnings research note that she expects Planet Fitness to at least meet EPS views. She expects a revenue beat and an 8.5%-9% systemwide same-store sales gain. The analyst remains bullish on the stock.
"Planet Fitness' stock has risen over 40% year-to-date and is trading at an EV/EBITDA multiple of roughly 22 times our 2019 estimate," Zackfia said. "We view the valuation as sustainable given the potential for earnings upside, the stickiness of Planet's membership base with very low monthly dues, and the annuity-like nature and predictability afforded by a franchised, membership-based business model."
The analyst, who rates the stock as outperform, also believes membership trends are healthy. She predicted a midteens year-over-year increase to 12.1 million members.
Meanwhile D.A. Davidson analyst Michael Kawamoto said Planet Fitness could raise guidance. He also believes the recent end of the firm's exclusive contract with Life Fitness provides an opportunity.
"New equipment options will most likely provide a more personalized and connected experience for Planet Fitness members in the future," he said in a research note. "The company is currently testing multiple manufacturers over the next couple of years as it builds out its technology ecosystem. While this process will take some time to work through, we believe that the next generation of PLNT equipment (will) further differentiate the company's gym experience from competitors."
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The post Planet Fitness Hits Buy Zone From Rare Pattern As Earnings Growth Accelerates Again appeared first on Investor's Business Daily.
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