Please ensure Javascript is enabled for purposes of website accessibility

Why Planet Fitness Stock Jumped 23.9% in April

By Keith Noonan – May 5, 2020 at 8:40AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The gym chain's stock has fallen roughly 23% in 2020, while the S&P 500 index is down roughly 12% across the same stretch.

What happened

Shares of Planet Fitness (PLNT -0.08%) climbed 23.9% in April, according to data from S&P Global Market Intelligence. The gym company's stock bounced back after falling 27.8% in March. 

^SPX Chart

^SPX data by YCharts

Sell-offs stemming from the coronavirus pandemic disrupted the market in March, and Planet Fitness' valuation sagged as the business closed its corporate-run gyms and franchise operations. The stock recovered in April in conjunction with momentum for the broader market and got a boost from the emergence of government plans to move the economy toward more normal operating conditions. 

The inside of a Planet Fitness gym.

Image source: Planet Fitness.

So what

The Trump administration released guidelines on April 17 for the first stage of reopening the economy, and the criteria seemed to pave the way for gyms to reopen in some states. With most of its locations still closed, Planet Fitness has seen its ability to bring new members on board diminished, and performance may be relatively sluggish even after business restrictions are eased. The company's membership-based business and bargain-focused model means that it may have managed to retain a large portion of its customer base despite headwinds created by the coronavirus, but the unprecedented conditions have presented new obstacles to growth. 

Now what

Planet Fitness stock has slipped early in May amid a sell-off within the broader market. The company's stock has dipped 4.8% in the month's trading so far.

^SPX Chart

^SPX data by YCharts

Planet Fitness is scheduled to report first-quarter results and host a conference call after the market closes on May 5. The company didn't give specific first-quarter sales or earnings guidance when it reported fourth-quarter results in March, but it did lay out targets for full-year performance.

The company's most recent guidance projected annual revenue to increase roughly 12%, same-store sales to rise 8%, and non-GAAP (adjusted) net income to climb roughly 10%. With the coronavirus crisis still disrupting many aspects of daily life in the U.S., there's a good chance management will alter its full-year outlook along with the company's first-quarter report.

Planet Fitness is valued at roughly 60 times the average analyst target for this year's earnings and roughly 8.6 times the average sales target. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Planet Fitness. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Planet Fitness Stock Quote
Planet Fitness
PLNT
$62.06 (-0.08%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
342%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.