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What Should You Know About Planet Fitness, Inc.'s (NYSE:PLNT) Long Term Outlook?

Simply Wall St

Planet Fitness, Inc.'s ( NYSE:PLNT ) latest earnings update in December 2018 confirmed that the company experienced a significant tailwind, more than doubling its earnings from the prior year. Investors may find it useful to understand how market analysts predict Planet Fitness's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

View our latest analysis for Planet Fitness

Analysts' expectations for the coming year seems optimistic, with earnings growing by a robust 32%. This growth seems to continue into the following year with rates reaching double digit 71% compared to today’s earnings, and finally hitting US$189m by 2022.

NYSE:PLNT Past and Future Earnings, April 22nd 2019

Although it’s helpful to be aware of the growth each year relative to today’s level, it may be more valuable estimating the rate at which the earnings are moving every year, on average. The pro of this method is that we can get a better picture of the direction of Planet Fitness's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 24%. This means, we can expect Planet Fitness will grow its earnings by 24% every year for the next couple of years.

Next Steps:

For Planet Fitness, I've compiled three relevant aspects you should further research:

  1. Financial Health : Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation : What is PLNT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether PLNT is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of PLNT? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com . This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.