September 28, 2022

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Shares of exercise gym chain Planet Fitness (PLNT -3.64%) were down on Tuesday after its financial results for the second quarter of 2022 failed to live up to Wall Street’s expectations. As of 3:30 p.m. ET, Planet Fitness stock was down 6%, having been down 10% earlier in the session.
Planet Fitness generates revenue in three ways: franchise fees, revenue from company-owned locations, and equipment sales to franchises. In Q2, the company generated revenue of $224 million, up 63.5% year over year. 
Planet Fitness’ revenue from its company-owned locations made the biggest jump. This segment’s revenue was up 150% from last year and accounted for 45% of total revenue. And more people are signing up for gym memberships now that restrictions from the pandemic continue to relax. The company added roughly 300,000 net new members during the quarter, and same-store sales were up 13.6% year over year.
This was good growth from Planet Fitness, but analysts had expected roughly $5 million more. And when stocks fail to meet expectations, even good results can cause shares to drop, as Planet Fitness is today.
On a more encouraging note, Planet Fitness’ outlook for 2022 is unchanged. It still expects full-year revenue growth in the mid-50% range and earnings-per-share (EPS) growth in the mid-80% range. In short, the company’s business continues to rebound nicely.
I suppose there is one change to guidance. Planet Fitness’ full-year EPS guidance last quarter was based on a diluted share count of 91.1 million shares. Now its assumption is based on a share count of 90.7 million shares because of share repurchases. This is something that management did frequently before the pandemic. And having finally resumed share repurchases now, it signals that Planet Fitness is in a healthy financial position.

Jon Quast has positions in Planet Fitness. The Motley Fool has positions in and recommends Planet Fitness. The Motley Fool has a disclosure policy.
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