Planet Fitness (PLNT): Evaluating Valuation Following Key Leadership Change at Major Franchise Operator

IGNITE Fitness Holdings, one of the largest Planet Fitness (PLNT) operators, is in the spotlight after naming Joe Pepe, Jr. as its new CEO. Investors are taking note given his nearly two decades with Planet Fitness and his track record of significant club expansion.

See our latest analysis for Planet Fitness.

Planet Fitness stock has seen some wild swings lately, with investors reacting not only to big executive shifts like Joe Pepe, Jr.'s appointment, but also ongoing questions about growth and competition. Despite a bumpy ride earlier this year, the 12-month total shareholder return stands at a notable 14.45%, and the long-term track record shows healthy gains. This could indicate that momentum may be starting to build again.

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With shares still trading nearly 30% below analyst price targets and sporting a strong long-term record, the key question now is whether Planet Fitness is undervalued, or if all the good news is already reflected in the current price.

Most Popular Narrative: 22.9% Undervalued

With Planet Fitness trading at $94.73, advocates of the most widely-followed narrative see the fair value at $122.81, presenting a notable upside from current levels. This perspective is rooted in forward-looking projections about earnings, margins, and growth of the membership base, and it underpins ongoing investor interest despite recent volatility.

*Ongoing format optimization, with more strength equipment, redesigned layouts, and attention to user preference, is increasing club utilization and member satisfaction, which should improve retention and provide opportunities for pricing power, positively impacting both revenue and net margins.*

Read the complete narrative.

Can the company’s club upgrades and pricing power really justify this bold valuation? The narrative leans on upgraded formats, higher earnings, and some punchy market share assumptions. If you want to see which future targets are baked into this fair value, you’ll want to keep reading. The financial ambition here might surprise you.

Result: Fair Value of $122.81 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks such as higher member attrition from online cancellations or waning appeal among advanced gym-goers could limit Planet Fitness’s ambitious growth targets.

Find out about the key risks to this Planet Fitness narrative.

Another View: Multiples Tell a Different Story

While many see upside based on future growth projections, looking at valuation through the lens of the price-to-earnings ratio gives pause. Planet Fitness trades at a lofty 42.1x, well above the US Hospitality industry average of 23.1x and even its fair ratio of 25.1x. Such a premium raises important questions about how much of the future is already in the price and whether the optimism is justified or riskier than it appears.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Planet Fitness Narrative

If you have a different perspective or want to dive deeper into the numbers yourself, you can easily craft your own view in just a few minutes. Do it your way

A great starting point for your Planet Fitness research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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