Like so many other industries, gyms across the nation were shut down due to COVID-19. Companies offering at-home fitness solutions -- like Peloton (PTON -4.57%) -- should continue to thrive in this environment thanks to featuring products that enable both fitness and social distancing.

When thinking longer term, however, Planet Fitness (PLNT -2.09%) -- a traditional brick-and-mortar gym chain -- is the best way to invest in the space. Here's why.

A woman working out.

Image source: Getty Images.

Better investment in a post-COVID world

Planet Fitness offers shareholders better value. The company trades hands at a trailing price to sales multiple of 8.9. Planet Fitness sales will shrink this year before rebounding in 2021. To compare, Peloton exchanges hands for a trailing price to sales multiple of 16.4. This is even after the stock pulled back 15% off of all-time highs this month. Planet Fitness's forward earnings multiple of 34 also matches up favorably to Peloton just breaking into positive net income territory for the first time last quarter.

With Peloton's revenues more quickly growing due to its products catering to social distancing, the company was born for this moment -- and some of that valuation premium is deserved. While that is nice, its stock may already reflect it: This year Peloton has jumped 186% while Planet Fitness has fallen 12%.

If COVID-19 were a permanent fixture in our world then Peloton would be the clear choice. Fortunately, COVID-19 probably has an expiration date. Leading infectious disease expert Dr. Anthony Fauci consistently (and publicly) reiterates his belief in a vaccine by early 2021. With 130+ vaccine candidates in development and several in late-stage clinical trials, this seems highly likely.

In this scenario, it's feasible to think businesses will slowly start to normalize as the vaccine is distributed and Planet Fitness will recover as well. While exercise at home could very well continue growing in a post-COVID world, Peloton would still have to compete with a plethora of in-person fitness offerings for the first time in several months.

The lack of competition has been fantastic for boosting Peloton's quarterly growth, but again, that same formidable competition will return. Planet Fitness' forward estimated revenue growth of 66% -- coming off of a large 2020 drop -- versus Peloton's estimated 36% growth reflects the expectation of that return. For many, Planet Fitness' industry-low cost of $10 a month to access a gym full of machines, weights, and instructors compared to $1900 or more for a machine, plus $39 per month for a software subscription  is a no-brainer when the option is available.

Bullish management sentiment and a rock-solid business model

On the most recent earnings call, Planet Fitness CEO Chris Rondeau spoke in detail about COVID-19 speeding up expansion opportunities for his company in the years ahead. To him, bankruptcies are providing more compelling real estate opportunities to expand the business. He even backed that up by spending $4 million of his own money on Planet Fitness stock after the company's gyms had already begun shutting down in March.

How could a gym chain CEO possibly be so confident in his company's long-term future today? Fortunately for Planet Fitness, the company owns roughly just 5% of its locations with franchisees owning the rest. By using a franchisee business model, Planet Fitness kept its quarterly cash burn at 5.6% while revenue was largely dormant. At the same time, other gym chains like Gold's Gym declared bankruptcy due to insolvency.

Rondeau spoke at length about other brick-and-mortar businesses' economic pain fostering his own company's gain. The management team preached a similar message during Great Recession, when it accurately predicted it would take notable, incremental market share.

Importantly, Planet Fitness' franchisees are not your typical boutique gym owners; they own an average of 20 stores. None have accepted Planet Fitness' financial help due to COVID-19 which speaks to the durability of the group.

This asset-light franchisee model powers industry-high EBITDA margins that make opening a Planet Fitness gym more appealing than opening any other. It also allows Planet Fitness to more aggressively pursue scale -- thanks to lower fixed costs -- thus helping to enhance access to its best-in-class value.

Going forward

Today, Peloton enjoys a pandemic that has forced all of its brick-and-mortar competition to shut down; its growth has accelerated accordingly. I do not believe this will last forever, and Peloton's notable outperformance makes the upside of owning it even more unclear. Conversely, Planet Fitness has endured COVID-19 pain and is as poised as anyone to emerge out of it even stronger than before. Between the two, Planet Fitness is the stronger investment.