Planet Fitness Could Gain 25%…In 2016

Planet Fitness

Planet Fitness Could Gain 25%…

One of Our Favorite Ideas for 2016—Shares Have Stalled Even as Franchise Growth Remains Robust. Planet Fitness shares are one of our favorite investment ideas heading into 2016. They have declined 7% over the past three months (vs. 11% increase in the S&P 500) even as growth in theall-important franchise segmentremains robust. Indeed, franchise revenue and EBITDA grew 25% and 30% Y/Y, respectively, in 3Q. Although our $20 PT—28% projected upside from here—implies a 16.6x EBITDA multiple on our 2016 estimate, we believe highly-predictable, capital-light 17-19% secular EBITDA gains merit this valuation and note that, on our 2017 estimates, the multiple drops to 14.5x.

Planet Fitness Could Gain 25%…
Planet Fitness Could Gain 25%…Planet Fitness Could Gain 25%…

One of Our Favorite Ideas for 2016—Shares Have Stalled Even as Franchise Growth Remains Robust. Planet Fitness shares are one of our favorite investment ideas heading into 2016. They have declined 7% over the past three months (vs. 11% increase in the S&P 500) even as growth in theall-important franchise segmentremains robust. Indeed, franchise revenue and EBITDA grew 25% and 30% Y/Y, respectively, in 3Q. Although our $20 PT—28% projected upside from here—implies a 16.6x EBITDA multiple on our 2016 estimate, we believe highly-predictable, capital-light 17-19% secular EBITDA gains merit this valuation and note that, on our 2017 estimates, the multiple drops to 14.5x.

One of Our Favorite Ideas for 2016—Shares Have Stalled Even as Franchise Growth Remains Robust. Planet Fitness shares are one of our favorite investment ideas heading into 2016. They have declined 7% over the past three months (vs. 11% increase in the S&P 500) even as growth in theall-important franchise segmentremains robust. Indeed, franchise revenue and EBITDA grew 25% and 30% Y/Y, respectively, in 3Q. Although our $20 PT—28% projected upside from here—implies a 16.6x EBITDA multiple on our 2016 estimate, we believe highly-predictable, capital-light 17-19% secular EBITDA gains merit this valuation and note that, on our 2017 estimates, the multiple drops to 14.5x.
One of Our Favorite Ideas for 2016—Shares Have Stalled Even as Franchise Growth Remains Robust. Planet Fitness shares are one of our favorite investment ideas heading into 2016. They have declined 7% over the past three months (vs. 11% increase in the S&P 500) even as growth in theall-important franchise segmentremains robust. Indeed, franchise revenue and EBITDA grew 25% and 30% Y/Y, respectively, in 3Q. Although our $20 PT—28% projected upside from here—implies a 16.6x EBITDA multiple on our 2016 estimate, we believe highly-predictable, capital-light 17-19% secular EBITDA gains merit this valuation and note that, on our 2017 estimates, the multiple drops to 14.5x.