Those who invested in Planet Fitness (NYSE:PLNT) a year ago are up 17%

We believe investing is smart because history shows that stock markets go higher in the long term. But if you choose that path, you’re going to buy some stocks that fall short of the market. Over the last year the Planet Fitness, Inc. (NYSE:PLNT) share price is up 17%, but that’s less than the broader market return. Unfortunately the longer term returns are not so good, with the stock falling 4.4% in the last three years.

Now it’s worth having a look at the company’s fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.

View our latest analysis for Planet Fitness

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Planet Fitness was able to grow EPS by 40% in the last twelve months. This EPS growth is significantly higher than the 17% increase in the share price. Therefore, it seems the market isn’t as excited about Planet Fitness as it was before. This could be an opportunity.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

Planet Fitness shareholders are up 17% for the year. But that return falls short of the market. But at least that’s still a gain! Over five years the TSR has been a reduction of 0.7% per year, over five years. It could well be that the business is stabilizing. It’s always interesting to track share price performance over the longer term. But to understand Planet Fitness better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we’ve spotted with Planet Fitness .

Planet Fitness is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com