Shares of exercise-gym chain Planet Fitness (PLNT 0.65%) pushed higher on Tuesday after the company reported results for the third quarter of 2023. They were better than expected, and management consequently raised guidance. And that's why Planet Fitness stock was up 16% as of 10 a.m. ET today.
Putting fears to rest?
It's worth pointing out that Planet Fitness stock has merely bounced back to where it was trading in September. The stock plunged on Sept. 15 after the company said it was replacing longtime CEO Chris Rondeau. This instilled fear among investors as it suggested something was wrong with the business.
But the third-quarter financial results had pleasant surprises, which is why the stock is bouncing back today. The company added roughly 100,000 new members during the quarter, which boosted its same-store sales by 8.4% year over year.
Higher revenue is causing profitability to boom. The company set a quarterly earnings-per-share (EPS) record last quarter of $0.48. And in the third quarter, EPS of $0.46 was up a whopping 43% year over year and a big reason for the stock's surge today.
The chart below shows the quarterly EPS trend for Planet Fitness but doesn't reflect third-quarter results.
PLNT EPS diluted (quarterly) data by YCharts.
What's next for Planet Fitness?
There were no bombshells in Planet Fitness' third-quarter report, which relieved investors who were worried about the CEO change. And the rest of 2023 looks bright for the company, with management raising its full-year guidance for revenue growth. It had expected 2023 sales to increase by 12% compared to 2022, but now it expects 14% growth.
However, Planet Fitness' third quarter ended on Sept. 30, so the quarter only included two weeks since Rondeau was replaced with interim CEO Craig Benson. And in the press release, Benson mentioned making adjustments so that the economics of the business better serve franchisees in light of the "new macro-environment."
Benson is a franchisee himself, so his proposed changes are likely good for all franchisees. But the situation is worth monitoring because it could change the economics at a corporate level. Time will tell if that's a good thing for Planet Fitness shareholders.
