Planet Fitness Stock Surges as People Return to the Gym

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Shares of

Planet Fitness

were rising Thursday after the gym franchiser reported strong third-quarter earnings that barreled past Wall Street estimates.

Planet Fitness (ticker: PLNT) reported an adjusted profit of 25 cents a share, beating forecasts for 18 cents, on sales of $154.3 million, topping expectations for $135 million. Total revenue increased by 46.4% from the same quarter last year.

“We are emerging from the Covid-19 pandemic stronger than ever, having achieved the highest sequential net member growth of any third quarter in company history, with membership levels reaching 97% of our all-time peak,” said CEO Christopher Rondeau in a Thursday earnings call.

The increase in revenue was driven by growth across the company’s three main segments: franchising, corporate-owned stores and equipment sales.

Growth in franchising was driven by royalties, web join fees, and equipment placing fees; corporate-owned segment growth was driven by temporary store closures and seven newly opened stores since July 2020; and revenue in the equipment segment were driven by higher equipment sales to existing franchise E-owned store, said Chief Financial Officer Thomas Fitzgerald.

The stock was up 13.4% to $93.65 Thursday. It reached an all-time high of $94.30 earlier in the session.

Fitness operators were hit especially hardwhen the pandemic shut down in-person gatherings last year. In March 2020, Planet Fitness saw its shares plunge from $88 to $24 as stay-at-home plays, such as

Peloton

(PTON), soared. But as people return to in-person workout sessions, that trend may be rapidly reversing.

Planet Fitness memberships rose for the third quarter in a row to more than 15 million people, up 200,000 sequentially and only 3% below pandemic levels, according to William Blair analyst Sharon Zackfia.

“With improving member trends a key leading indicator of accelerating franchised development, we maintain our Outperform rating on Planet Fitness,” Zackfia said in a research note.

Roughly 40% of the company’s joins were first-time gym members, which is up slightly from 2019, Rondeau said. Planet Fitness’ system-wide same stores sales increased 7.2% during the quarter.

The company also released revised full-year projections Thursday. Executives expect new store openings to range between 110 and 120 by the end of the calendar year. Full-year revenue will be between $570 million and $580 million, up from previous estimates of $530 million and $540 million. Adjusted earnings will be between 75 cents and 80 cents a share, up from past projections of between 65 cents and 70 cents.

Write to Sabrina Escobar at [email protected]