Planet Fitness, Inc. PLNT, a leading franchisor and operator of fitness centers in the United States, has been making notable strides in the market. After trading around $102 per share for the past four sessions, the stock reached a new 52-week high of $105.77 on Tuesday. It then saw a slight pullback, closing at $104.65, marking a 3.1% increase from the previous day's closing price of $101.55.

This milestone coincides with the company’s recent announcement of key operational metrics for the end of 2024, highlighting its strategic direction. Alongside these updates, Planet Fitness strengthened its leadership team by appointing Chip Ohlsson as chief development officer and Brian Povinelli as chief marketing officer, both bringing extensive experience in fostering growth. (read more: PLNT Unveils Key 2024-End Metrics and Outlines 2025 Strategy)

As the company moves into 2025, it is focused on redefining its brand, improving member experiences, expanding product offerings and accelerating the pace of club openings, aiming to enhance stakeholder value and drive shareholder returns.

The stock has shown impressive growth, soaring 40.8% in the past year and significantly outpacing the 18.8% growth of the Zacks Leisure and Recreation Services industry. This remarkable performance has drawn attention from investors. Over the same period, the broader Zacks Consumer Discretionary sector has risen 12%, while the S&P 500 increased 23.6%.

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The company has also outperformed some other industry players in the past year, including Xponential Fitness, Inc. XPOF, OneSpaWorld Holdings Limited OSW and Vail Resorts, Inc. MTN. During the said time frame, XPOF and OSW shares have rallied 24.5% and 39.1%, respectively, while MTN declined 15.2%.

What’s Driving Planet Fitness’ Growth?

Focus on New Growth Model: The company has introduced a new growth approach aimed at enhancing long-term expansion and operational efficiency. The focus of this model is on increasing returns from new stores without significantly impacting its P&L. The plan aims to reduce capital requirements for opening and operating franchises while identifying opportunities to lower operating costs. This will give franchisees more flexibility and resources to expand their store portfolios.

As of the third quarter of 2024, the company reported that newly built clubs and those undergoing an equipment replacement cycle realized cost benefits from the new growth model. The company remains optimistic that these changes will drive higher returns on investments and support long-term store growth.

Pricing Strategies and Strong Membership Growth: The company has been implementing targeted pricing strategies to adapt to the current economic environment while positioning itself for sustainable growth. After the successful trial of two pricing tiers, $15 and $12.99, in about 100 stores in 2023, the company set the final price of the Classic Card membership at $15. In the third quarter of 2024, as part of its new growth model, PLNT implemented a price increase from $10 to $15 for new members joining after the announcement. This move is expected to prevent short-term declines in member growth while offering long-term benefits. The company anticipates a low to mid-single-digit revenue increase for existing clubs after a year of implementing the new pricing.

Planet Fitness has experienced significant growth in its membership base, driven by strong member acquisition and effective initiatives. As of Dec. 31, 2024, the company increased its membership base to approximately 19.7 million, with system-wide same-club sales growing 5% year over year.

Expansion Efforts: The company is advancing its expansion strategy, focusing on both domestic and international growth opportunities. In 2024, Planet Fitness opened 150 new clubs, including 21 corporate-owned locations, bringing the total number of clubs to 2,722 as of Dec. 31, 2024. The company placed equipment in 124 new franchised locations during the year.

With strong market dynamics and an ongoing growth trajectory, the company remains confident about achieving its long-term goal. The long-term target of 5,000 clubs in the United States is based primarily on 20,000-square-foot traditional Planet Fitness. It continues to work on smaller footprint clubs to infill locations and less populated areas, which would expand its domestic opportunity.

PLNT Trades Above 50 & 200-Day SMA

Technical indicators suggest a continued strong performance for Planet Fitness. From the graphical representation given below, it can be observed that PLNT stock is riding above the 50-day simple moving average (SMA) and 200-day SMA, signaling a bullish trend. The technical strength underscores positive market sentiment and confidence in PLNT’s financial health and prospects.

50 & 200-Day Moving Averages

Image Source: Zacks Investment Research

Estimate Trend Favors PLNT

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Planet Fitness’ 2025 earnings per share has moved up in the past 60 days. The estimated figure indicates 17.2% year-over-year growth.

How Should Investors Play PLNT Stock?

Planet Fitness continues to capitalize on its low-cost growth model, effective pricing strategies and expanding global presence. With the recent leadership appointments, the company is sharpening its focus on redefining its brand, enhancing member experiences and accelerating club openings. As it moves into 2025, these strategic efforts are expected to drive growth and shareholder value, making this Zacks Rank #2 (Buy) stock a compelling option for investors looking for long-term growth potential. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Vail Resorts, Inc. (MTN) : Free Stock Analysis Report

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