Planet Fitness’s SWOT analysis: stock poised for growth amid challenges

Planet Fitness, Inc. (NYSE: NYSE:PLNT), a leading fitness center operator with a market capitalization of $8.87 billion, has been making waves in the fitness industry with its recent performance and strategic initiatives. InvestingPro analysis shows the company maintains a "GREAT" overall financial health score, positioning it strongly as it navigates through a dynamic market landscape. Investors and analysts are closely watching its progress and potential for future growth.

Company Overview and Recent Performance

Planet Fitness has established itself as a dominant player in the fitness industry, offering low-cost memberships and a wide network of franchise-owned and corporate-owned gyms. The company’s focus on providing a welcoming environment for all fitness levels has resonated with consumers, leading to steady membership growth and expansion.

In the first quarter of 2025, Planet Fitness reported solid results, with same-store sales surpassing expectations. The company’s impressive 59.68% gross profit margin and 10.26% revenue growth demonstrate strong operational efficiency. Performance has been particularly strong in its equipment segment, with revenue up 49% year-over-year in the fourth quarter of 2024, driven by franchisees purchasing strength equipment.

For the fiscal year 2025, Planet Fitness has reiterated its guidance, projecting 10% revenue growth. However, EBITDA growth is expected to be around 10%, which is below the consensus estimate of approximately 15%. Despite this, analysts remain optimistic about the company’s prospects, with several firms maintaining positive ratings and increasing their price targets.

Membership Trends and Pricing Strategy

One of the key drivers of Planet Fitness’s success has been its Black Card membership tier, which has shown consistent growth. The company has reported an increase in Black Card membership mix both year-over-year and quarter-over-quarter, indicating strong customer loyalty and a willingness to pay for premium services.

Planet Fitness implemented a significant price increase for its base membership last year, raising it by 50% for new members. While this move initially raised concerns about potential impacts on new member acquisition, analysts believe that the price increase will be accretive to the company’s financial performance. RBC Elements’ proprietary analysis suggests that the pricing strategy positions Planet Fitness favorably against competitors and could potentially lead to a 2.1% upside to the consensus 2025 EBITDA estimates.

Expansion Plans and International Growth

Planet Fitness continues to focus on expansion, both domestically and internationally. The company added 150 new units in 2024 and has plans to potentially increase this to 200 annually in the future. International markets, including Spain, Australia, and Mexico, have shown promising results, indicating significant growth opportunities beyond the United States.

The company is also exploring alternative gym formats to increase penetration in smaller communities, demonstrating its adaptability to different market needs. This strategy could open up new avenues for growth and help Planet Fitness maintain its competitive edge.

Competitive Landscape and Market Position

While Planet Fitness enjoys a strong position in the market, the competitive landscape is evolving. The recent acquisition of Crunch Fitness by Leonard Green & Partners signals increased competition in the affordable fitness segment. Crunch Fitness has experienced significant growth since 2019, now operating over 500 gyms worldwide with more than 3 million members.

Despite this competition, Planet Fitness maintains its edge with an average of approximately 7,500 members per location and a robust new club performance. The company’s "Judgment Free Zone" philosophy and affordable pricing continue to resonate with consumers, positioning it as the "Walmart (NYSE:WMT) of Gyms" in terms of reach and value proposition.

Future Outlook and Potential Catalysts

Analysts are particularly excited about potential legislative developments that could allow gym memberships to qualify as Health Savings Account (HSA) expenses. If passed, this legislation could significantly boost membership growth for Planet Fitness.

Additionally, the company has been testing upgrades to its Black Card Spa, including red light therapy and spray tanning, which have shown positive results. These enhancements could further differentiate Planet Fitness from competitors and drive increased Black Card memberships.

Bear Case

How might economic uncertainties affect PLNT’s membership growth?

Economic uncertainties pose a significant risk to Planet Fitness’s membership growth. In times of financial stress, consumers may cut back on discretionary spending, including gym memberships. While Planet Fitness is positioned as a value option, prolonged economic downturns could still impact new member sign-ups and retention rates. The company’s ability to maintain its low-cost model while continuing to invest in equipment and facilities may be challenged if consumer spending declines significantly.

What challenges does PLNT face in maintaining its market position?

Planet Fitness faces increasing competition from other fitness chains expanding their low-cost offerings. The acquisition of Crunch Fitness by Leonard Green & Partners, with plans for massive expansion, could potentially erode Planet Fitness’s market share. Additionally, the company’s delayed implementation of the Black Card price increase suggests caution in the current economic climate, which could impact short-term revenue growth. The uncertain timeline for ramping up annual store openings also presents a challenge in maintaining market dominance through physical presence.

Bull Case

How could the potential HSA legislation benefit PLNT’s membership growth?

The potential legislation allowing gym memberships to qualify as Health Savings Account (HSA) expenses could be a game-changer for Planet Fitness. If passed, this could significantly lower the effective cost of memberships for many consumers, making Planet Fitness an even more attractive option. The company’s extensive network of locations and affordable pricing would position it well to capitalize on this change, potentially leading to a surge in new memberships and increased retention rates. This legislative development could serve as a powerful catalyst for accelerated growth in the coming years.

What advantages does PLNT have over its competitors in the current market?

Planet Fitness has several key advantages in the current market. Its established brand as a judgment-free, affordable gym option resonates strongly with a broad consumer base. The company’s scale, with over 2,500 units and 19.6 million members, provides significant operational efficiencies and bargaining power with suppliers. Planet Fitness’s franchise model also allows for rapid expansion with lower capital requirements. The company’s strong performance in new club openings, with significant growth in the first year and steady increases thereafter, demonstrates its ability to quickly establish profitable locations. Additionally, Planet Fitness’s focus on technological integration and enhanced offerings like the Black Card Spa upgrades helps differentiate it from competitors and drive customer loyalty.

SWOT Analysis

Strengths:

• Strong brand recognition and affordable pricing strategy
• Extensive network of over 2,500 locations
• Robust performance of new club openings
• Growing Black Card membership base

Weaknesses:

• Delayed implementation of Black Card price increase
• Potential impact of tariffs on future equipment pipeline
• Uncertainty around timeline for accelerating annual store openings

Opportunities:

• Potential HSA legislation to boost membership growth
• International expansion in promising markets like Spain, Australia, and Mexico
• Development of alternative gym formats for smaller communities
• Upgrades to Black Card Spa offerings

Threats:

• Increasing competition from expanding fitness chains like Crunch Fitness
• Economic uncertainties affecting consumer discretionary spending
• Potential market saturation in the United States
• Regulatory changes impacting the fitness industry

Analysts Targets

• Stifel: $120.00 (May 22nd, 2025)
• RBC Capital Markets: $110.00 (May 9th, 2025)
• Canaccord Genuity: $120.00 (April 17th, 2025)
• Piper Sandler: $123.00 (February 14th, 2025)
• RBC Capital Markets: $120.00 (February 24th, 2025)
• Jefferies: $150.00 (January 15th, 2025)
• Macquarie Equity Research: $99.00 (November 8th, 2024)

Planet Fitness continues to navigate a complex market environment, balancing growth opportunities with potential challenges. The company’s current ratio of 2.1 indicates strong liquidity, while analyst consensus remains bullish with price targets reaching up to $150. While the company faces increased competition and economic uncertainties, its strong brand, expanding membership base, and strategic initiatives position it well for future success. Based on InvestingPro’s Fair Value analysis, the stock currently appears slightly overvalued. Discover more insights and make smarter investment decisions with InvestingPro’s comprehensive research reports, available for 1,400+ top US stocks including PLNT.

This analysis is based on information available up to May 25, 2025.

InvestingPro: Smarter Decisions, Better Returns

Gain an edge in your investment decisions with InvestingPro’s in-depth analysis and exclusive insights on PLNT. Our Pro platform offers fair value estimates, performance predictions, and risk assessments, along with additional tips and expert analysis. Explore PLNT’s full potential at InvestingPro.

Should you invest in PLNT right now? Consider this first:

Investing.com’s ProPicks, an AI-driven service trusted by over 130,000 paying members globally, provides easy-to-follow model portfolios designed for wealth accumulation. Curious if PLNT is one of these AI-selected gems? Check out our ProPicks platform to find out and take your investment strategy to the next level.

To evaluate PLNT further, use InvestingPro’s Fair Value tool for a comprehensive valuation based on various factors. You can also see if PLNT appears on our undervalued or overvalued stock lists.

These tools provide a clearer picture of investment opportunities, enabling more informed decisions about where to allocate your funds.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.