Results: Planet Fitness, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

It's been a good week for Planet Fitness, Inc. (NYSE:PLNT) shareholders, because the company has just released its latest first-quarter results, and the shares gained 9.1% to US$64.95. It looks like a credible result overall - although revenues of US$248m were in line with what the analysts predicted, Planet Fitness surprised by delivering a statutory profit of US$0.39 per share, a notable 15% above expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Planet Fitness

After the latest results, the 17 analysts covering Planet Fitness are now predicting revenues of US$1.13b in 2024. If met, this would reflect an okay 3.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to expand 12% to US$1.91. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.14b and earnings per share (EPS) of US$1.99 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

The consensus price target held steady at US$76.69, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Planet Fitness analyst has a price target of US$100.00 per share, while the most pessimistic values it at US$61.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Planet Fitness' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 4.2% growth on an annualised basis. This is compared to a historical growth rate of 17% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.7% per year. Factoring in the forecast slowdown in growth, it seems obvious that Planet Fitness is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Planet Fitness' revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Planet Fitness. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Planet Fitness analysts - going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Planet Fitness that you need to take into consideration.

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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.