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What Makes Planet Fitness (PLNT) a Worthy Investment Option?

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What Makes Planet Fitness (PLNT) a Worthy Investment Option?

Investment management company Vulcan Value Partners recently released its second quarter 2024 investor letter. A copy of the letter can be downloaded here. The quarterly results were mixed. The firm faced stock price volatility with some of the companies in its portfolios but managed this by adhering to discipline and capitalizing on the volatility to invest in companies with improved price-to-value ratios. In the quarter, the fund’s Large Cap Composite returned -2.9% net of fees and expenses, the Small Cap Composite returned -0.1 % net, the Focus Composite returned -0.4% net, the Focus Plus composite returned -0.8% and the All-Cap Composite returned 1.1% net. For more information on the fund’s best picks in 2024, please check its top five holdings.

Vulcan Value Partners highlighted stocks like Planet Fitness, Inc. (NYSE:PLNT) in the second quarter 2024 investor letter. Planet Fitness, Inc. (NYSE:PLNT) franchises and operates fitness centers. The one-month return of Planet Fitness, Inc. (NYSE:PLNT) was 1.90%, and its shares gained 13.83% of their value over the last 52 weeks. On July 26, 2024, Planet Fitness, Inc. (NYSE:PLNT) stock closed at $74.99 per share with a market capitalization of $6.613 billion.

Vulcan Value Partners stated the following regarding Planet Fitness, Inc. (NYSE:PLNT) in its Q2 2024 investor letter:

“Planet Fitness, Inc. (NYSE:PLNT) pioneered the “high value, low price” (HVLP) gym model and operates over 2,500 gyms globally with 18.7 million members. Their straightforward, no-frills approach offers excellent value, appealing to a diverse and casual fitness demographic. Members enjoy a clean environment, regularly updated equipment, and accessible pricing starting at $10 per month, with their premium “Black Card” membership providing extensive benefits and access to all locations. Planet Fitness captured roughly 90% of U.S. gym membership growth from 2011-2019. The company’s dominant scale coupled with high advertising spend drives powerful growth, and the company plans to double its number of U.S. locations. Planet Fitness demonstrates robust same-store sales growth, high EBIT margins, strong returns on capital, and excellent free cash flow conversion.”

A smiling person in sports gear testing out a piece of new fitness equipment.

Planet Fitness, Inc. (NYSE:PLNT) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held Planet Fitness, Inc. (NYSE:PLNT) at the end of the first quarter which was 37 in the previous quarter. Total revenue of Planet Fitness, Inc. (NYSE:PLNT) for the first quarter increased to $248.0 million from $222.2 million in the same period last year, primarily due to revenue increases across the franchise and corporate-owned segments. While we acknowledge the potential of Planet Fitness, Inc. (NYSE:PLNT) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed Planet Fitness, Inc. (NYSE:PLNT) and shared Carillon Eagle Mid Cap Growth Fund’s views on the company. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

Disclosure: None. This article is originally published at Insider Monkey.

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