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Earnings Results Confirm That These 3 Companies Have Rebounded From Last Year's Losses

By Jon Quast - May 12, 2021 at 10:01AM

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The speed with which these businesses have fully recovered is surprising.

The pandemic was harder for some companies than others. Brick-and-mortar businesses were among the hardest hit as the world tried to slow the spread of the coronavirus through physical distancing. Three such companies that were negatively impacted were Texas Roadhouse (TXRH 0.14%), Five Below (FIVE -2.31%), and Planet Fitness (PLNT -1.19%).

Texas Roadhouse and Planet Fitness have already reported earnings for the first quarter of 2021 that showed sharp recoveries to their businesses. Five Below hasn't reported on the first quarter yet, but its most recent update shows it's well along in its recovery as well.

Three hands signal a thumbs up in approval.

Image source: Getty Images.

1. Texas Roadhouse: Shrugging off dining room limitations

Casual-dining restaurant company Texas Roadhouse generated all-time high sales for the first quarter, which is a remarkable recovery when considering how difficult 2020 was. Full-year revenue was down 13% from 2019 and was comparable to the company's revenue back in 2017. However, because its expenses are higher now from operating more locations (among other things), its net profit took a far greater hit in 2020. Its earnings per share plummeted to just $0.45 -- its lowest per-share profit since 2005.

If Texas Roadhouse shareholders were cautiously optimistic going into 2021, their hopes were dashed in February when management disclosed that comparable-restaurant sales fell 18.2% in December after briefly recovering in October. This seemed to indicate that casual-dining restaurant stocks were still far away from a recovery. However, the company's first-quarter revenue came roaring back with a vengeance, climbing 22% from the same period last year.

Don't think this is just a case of an easy year-over-year comparison. Texas Roadhouse's revenue was up almost 16% from 2019 first-quarter revenue as well. And indeed, its more than $800 million in quarterly revenue was a company record.

Here's why a quarterly record is astounding: Texas Roadhouse is still operating at an extreme disadvantage. Over 500 locations still have restrictions on seating. And in April, less than 19% of sales were to-go orders. Therefore, the chain is achieving record numbers primarily through dine-in restaurant traffic despite ongoing limited capacity. For this reason, I think it's safe to say Texas Roadhouse is back and better than ever.

The exterior of a Five Below store location.

Image source: Five Below.

2. Five Below: The happiest holiday season ever

Like Texas Roadhouse, discount retailer Five Below is also enjoying some historic numbers right now. This was hard to imagine in early 2020. For the first quarter of 2020 (which ended May 2, 2020), Five Below's sales plummeted 45% year over year. Many locations were closed by the pandemic (it's not an essential retailer), and the company's e-commerce operations have always been very small. 

For fiscal year 2020 (which ended Jan. 30, 2021), however, Five Below's net sales were actually up 6.2% from 2019. Fourth-quarter sales did a lot of the heavy lifting for the year. For the quarter, sales were up almost 25% year over year to $859 million, hoisted by comps growth of 13.8%. Granted, the fourth quarter of 2019 was a disappointment, so it was an easy comparison. But 13.8% comps growth was Five Below's greatest for a fourth quarter in its history.

The company is continuing to expand its store count, a vital component to an investing thesis for this retail stock. Despite a tough operating environment in 2020, management didn't abandon its expansion plans, opening 120 net stores during the year. For 2021, its expansion plans continue with a new distribution center set to open in the summer. This distribution center will support new store growth in the western U.S., with the company entering states like Utah and New Mexico for the first time this year. In all, it plans to open 170 to 180 new locations in 2021, supporting its goal of growing from 1,050 locations today to over 2,500 long term

Five Below is expected to report fiscal 2021 first-quarter earnings results in early June.

A rack of barbells are pictured in a gym setting.

Image source: Getty Images.

3. Planet Fitness: What exercise-at-home trend?

Brick-and-mortar gym company Planet Fitness was at a disadvantage throughout 2020. Gyms were closed for part of the year, and once they started reopening, it still wasn't a great experience. After all, I don't think people are eager to get in shape while wearing a facemask and waiting for equipment to be sanitized. This reality gave rise to a strong exercise-at-home trend, with many makers of home exercise equipment benefiting. 

To understand how rough 2020 was, consider that Planet Fitness ended the first quarter of 2020 with a record 15.5 million members across 2,039 locations worldwide. The company ended 2020 with just 13.5 million members, shedding a whopping 2 million memberships in just three quarters. With declining membership, full-year revenue was down 41% year over year to $407 million while its bottom line sank from net income of $135 million in 2019 to a net loss of $15 million in 2020.

However, Planet Fitness is back on a growth trajectory, regaining 600,000 members in the first quarter of 2021. This is evidence that people are eagerly returning to the gym, contradicting those who believed gyms were being disrupted and replaced by exercise-at-home players. In reality, there's probably room for both at-home and in-gym fitness.

To its credit, management kept opening new gyms in 2020, adding 130 new locations last year. This year it expects between 75 and 100 more, taking advantage of vacant commercial real estate and struggling competitors. Therefore, with rising membership and an ongoing increasing base of gym locations, Planet Fitness looks like a strong reopening investment in 2021.

Investor takeaway

Of course, you shouldn't buy stock in Texas Roadhouse, Five Below, or Planet Fitness simply because they've bounced back from hard times. To the contrary, you should be looking forward and buying stock in companies poised to thrive over the long haul. And in my opinion, these three companies are indeed good businesses for the long term. Recent results demonstrate they've bounced back, and I expect current trends to continue in the coming quarters and years.


Jon Quast owns shares of Five Below and Planet Fitness. The Motley Fool owns shares of and recommends Planet Fitness and Texas Roadhouse. The Motley Fool recommends Five Below and recommends the following options: long January 2022 $115.0 calls on Five Below and short January 2022 $120.0 calls on Five Below. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Planet Fitness, Inc. Stock Quote
Planet Fitness, Inc.
$77.81 (-1.19%) $0.94
Five Below, Inc. Stock Quote
Five Below, Inc.
$143.98 (-2.31%) $-3.40
Texas Roadhouse, Inc. Stock Quote
Texas Roadhouse, Inc.
$95.22 (0.14%) $0.13

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