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Why Planet Fitness, Inc. Stock Popped Today

By Steve Symington - Updated Feb 23, 2018 at 3:21PM

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The gym operator pumped out a beefy fourth quarter, lifted its buyback program, and offered strong forward guidance.

What happened

Shares of Planet Fitness Inc. (PLNT 6.12%) were up 10.3% as of 2 p.m. EST Friday after the fitness center operator announced strong fourth-quarter 2017 results.

Planet Fitness' revenue climbed 15.1% year over year to $134 million, which translated to 19.1% growth in adjusted net income to $23.5 million, or $0.24 per share. Both the top and bottom lines arrived comfortably ahead of expectations for adjusted earnings of $0.23 per share on revenue of $131.1 million.

Planet Fitness gym location storefront

IMAGE SOURCE: PLANET FITNESS.

So what

Perhaps most impressive, Planet Fitness' systemwide same-store sales increased 11.6% -- the metric's largest percentage increase of the year and its 11th straight year of positive results. Planet Fitness also opened a company-record 210 new locations over the past year, adding 1.7 million net new members in 2017.

"Our business has continued to accelerate," added Planet Fitness CEO Christopher Rondeau, "which is a testament to the growing strength of our brand and the appeal of our affordable, non-intimidating fitness offering, especially with casual and first-time gym users."

If that wasn't enough, Planet Fitness announced an $80 million increase to its share-repurchase program, bringing its total authorization to $100 million.

Now what

Planet Fitness expects total revenue to increase roughly 20% in 2018 -- to just under $516 million -- assuming a high-single-digit percentage increase in systemwide same-store sales. That should result in an approximately 40% increase in adjusted net income, to roughly $1.18 per share. This outlook compares favorably to consensus estimates calling for 2018 revenue and adjusted earnings of $477.9 million and $1.09 per share, respectively.

With a better-than-expected fourth quarter, increased buyback program, and healthy outlook, there was little not to love about this impressive report from Planet Fitness. And it's no surprise to see the stock trading at a fresh 52-week high in response.

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