Shares of Planet Fitness plunged after the earnings. Should you buy?

Shares of Planet Fitness plunged after the earnings. Should you buy?
Shares of Planet Fitness plunged after the earnings. Should you buy?

The current earnings season is not over yet, but Planet Fitness (NYSE: PLNT) is on track to become one of the most notable stocks of this period.

Gym stocks, which were already down significantly for the year, lost nearly a third of their value following the release of first-quarter earnings on Thursday. Cuts to its sales and profit forecasts, as well as management’s decision not to raise the price of its premium Black Card membership, appeared to spook investors. The stock is down about 58% so far this year.

Will AI create the world’s first billionaire? Our team just published a report on a little-known company called “Indispensable Monopoly” that provides critical technology that both Nvidia and Intel need. Continue “

That may leave investors wondering what to do. Should they buy Planet Fitness or stay away from what has suddenly become an even more volatile stock?

Image source: Getty Images.

What happened

At first glance, Planet Fitness’ earnings report looked solid. Revenue increased 22% year over year to $337 million. Furthermore, even with a 101% increase in cost of revenue amid higher marketing spending and operational challenges, its net income increased 23% to $52 million.

Still, the cost of revenue quickly became a concern. In addition to the decision to keep the cost of Black Card membership stable, new member signups fell 36% year over year and the company increased marketing spending.

Accordingly, it adjusted its expected 2026 revenue growth to 7%, down from a previous forecast of 9%. It also forecast a net income decline of 2%, in contrast to its previous guidance of a 4% to 5% increase.

The new state of Planet Fitness shares

However, the share price drop seems like an overreaction, and not just because it’s at its lowest levels since 2020. The trailing P/E ratio is now at 17, and its forward P/E has dropped to 13.

This type of stock behavior appears to be discounting the premise of a permanent slowdown in Planet Fitness’s business, and it’s too early to say if that’s what’s happening.

Admittedly, with stocks hammered this year, CEO Colleen Keating’s leadership may face a test. Additionally, Planet Fitness has traditionally been the budget-conscious consumer’s gym, a factor that could make it difficult for the company to raise prices.

Still, the company expects between 180 and 190 new club openings, a significant addition for a company with 2,909 locations as of March 31. Additionally, another 150 to 160 franchisee-owned locations are expected to purchase new equipment, likely increasing their competitiveness.

These don’t seem like the actions of a company that is permanently doomed to grow its profits at 2% per year. Additionally, the Black Card raise that the company delayed will likely be implemented at some point, which should help the stock recover.

Moving Forward with Planet Fitness Stock

Given the state of Planet Fitness, the stock appears to be a buy at these levels.

Admittedly, the upcoming revenue slowdown and falling profits are cause for concern. Furthermore, management’s reluctance to increase the cost of Black Card membership will not bolster investor confidence in the stock.

However, its forward P/E ratio of 13 should limit the stock’s downside risk from here. If sentiment around the company proves too bearish, Planet Fitness stock will likely rally.

Should You Buy Planet Fitness Stock Right Now?

Before you buy shares in Planet Fitness, consider this:

He Varied and Dumb Stock Advisor The analyst team has just identified what they believe are the 10 best stocks for investors to buy now… and Planet Fitness was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you would have $471,827!* Or when NVIDIA made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $1,319,291!*

Now, it is worth noting stock advisor The total average return is 986.%: An overwhelming outperformance of the market compared to the S&P 500’s 207%. Don’t miss the latest Top 10 list, available with Stock Advisorand join an investing community created by individual investors for individual investors.

See the 10 actions »

*Stock Advisor returns from May 10, 2026.

Will Healy has no position in any of the stocks mentioned. The Motley Fool posts and recommends Planet Fitness. The Motley Fool has a disclosure policy.

Shares of Planet Fitness plunged after the earnings. Should you buy? was originally published by The Motley Fool

Source link