It has been about a month since the last earnings report for Planet Fitness (PLNT Quick QuotePLNT - Free Report) . Shares have added about 4.3% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Planet Fitness due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Planet Fitness Q2 Earnings & Revenues Top Estimates

Planet Fitness reported stellar second-quarter 2024 results, with adjusted earnings and revenues beating the Zacks Consensus Estimate and increasing year over year.

The quarter’s performance was driven by contributions from new store openings, higher royalty revenues and an asset-light growth model. The strength in the contributions from these factors was reflected in the year-over-year increase in system-wide same-store sales.

The company aims to define its growth prospects by capitalizing on meaningful opportunities across the industry, globally. Also, its aim to deliver enhanced shareholder value bodes well.

Earnings & Revenue Discussion

The company reported adjusted earnings per share (EPS) of 71 cents, which surpassed the Zacks Consensus Estimate of 65 cents by 9.2%. In the prior-year quarter, the company reported adjusted EPS of 65 cents.

Quarterly revenues of $300.9 million topped the consensus mark of $292 million by 2.9%. The top line also improved 5.1% year over year, driven by system-wide same-store sales growth of 4.2% year over year.

Adjusted EBITDA was $127.5 million, up from $118.9 million reported in the year-ago quarter.

Segmental Performance

Franchise: Revenues of $107.8 million jumped 9.1% on a year-over-year basis. The upside was driven by a rise of $6.3 million stemming from an uptick in royalty revenues, $1.8 million from new stores opened since Apr 1, 2023, and $1.3 million from higher royalties on annual fees. The segment’s EBITDA was $77.4 million, up 17.1% year over year.

Corporate-owned Stores: Revenues of this segment amounted to $125.5 million, up 10.3% from the reported value of $113.8 million in the year-ago quarter. The uptick can primarily be attributed to an increase of $6.6 million from corporate-owned stores and $5.1 million from new stores opened and acquired since Apr 1, 2023.
Segment EBITDA totaled $49.3 million, up 1.2% year over year.

Equipment: Segmental revenues totaled $67.7 million, down 8.4% year over year. The downside was due to $4.7 million lower revenues from equipment sales to new franchisee-owned stores and $1.5 million lower revenues from equipment sales to existing franchisee-owned stores.
This segment’s EBITDA was $18.6 million, up 8.4% year over year.

Other Financial Details

As of Jun 30, 2024, Planet Fitness had cash and cash equivalents of $247 million compared with $275.8 million as of Dec 31, 2023. Long-term debt (net of current maturities) was $2.16 billion, up from $1.96 billion at the end of Dec 31, 2023. The current portion of the long-term debt at the end of the second quarter was $20.5 million, down from $20.8 million at Dec 30, 2023-end.

2024 Outlook Updated

Planet Fitness still expects revenues to increase in the 4-6% range from the 2023 level. System-wide same-store sales are still predicted in the 3-5% band. The company continues to anticipate new equipment placements to be between approximately 120 and 130 in franchisee-owned locations.

Adjusted EBITDA is still estimated to increase in the 7-9% range.

Adjusted net income is now envisioned to increase in the band of 4-6% from the 2023 level, down from the prior expected 6-8% range.

Management forecasts adjusted EPS to increase in the 7-9% range from the 2023 level. It anticipates adjusted shares outstanding to be approximately 86.5 million, down from the previous expectation of 88 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Planet Fitness has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Planet Fitness has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Planet Fitness belongs to the Zacks Leisure and Recreation Services industry. Another stock from the same industry, Live Nation (LYV Quick QuoteLYV - Free Report) , has gained 5.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.

Live Nation reported revenues of $6.02 billion in the last reported quarter, representing a year-over-year change of +7%. EPS of $1.03 for the same period compares with $1.02 a year ago.

For the current quarter, Live Nation is expected to post earnings of $1.61 per share, indicating a change of -9.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.7% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Live Nation. Also, the stock has a VGM Score of A.