Investment Thesis
Planet Fitness demonstrates strong operational fundamentals with 12.1% revenue growth and exceptional 29.3% operating margins, generating robust free cash flow of $122M. However, the critically negative stockholders' equity of -$482.2M and substantial $2.5B debt burden create material financial risk, with flat net income YoY signaling concerning margin pressure despite operational growth.
Strengths
- Strong revenue growth of 12.1% YoY in a mature industry segment
- Exceptional operating margin of 29.3% demonstrates efficient operations
- Outstanding free cash flow generation of $122M with 36.2% FCF margin
- Adequate liquidity position with $375.3M cash and 2.07x current ratio
- Sufficient interest coverage of 4.6x despite high leverage
Risks
- Critical: Negative stockholders' equity of -$482.2M indicates technical insolvency on balance sheet basis
- Severe leverage with $2.5B debt against -$482.2M equity creating refinancing risk
- Net income flat (+0.0%) despite 12.1% revenue growth reveals deteriorating profitability at net level
- Very low return on assets of 1.7% despite strong operations
- High financial distress risk if operating cash flow deteriorates or debt cannot be refinanced
Key Metrics to Watch
- Net income trend and margin compression drivers versus revenue growth
- Total debt level and refinancing ability; path to positive equity
- Operating cash flow sustainability relative to debt service obligations
- Return on assets improvement and capital efficiency metrics
Financial Metrics
Revenue
337.2M
Net Income
51.6M
EPS (Diluted)
$0.00
Free Cash Flow
122.0M
Total Assets
3.1B
Cash
375.3M
Profitability Ratios
Gross Margin
N/A
Operating Margin
29.3%
Net Margin
15.3%
ROE
N/A
ROA
1.7%
FCF Margin
36.2%
Balance Sheet & Liquidity
Current Ratio
2.07x
Quick Ratio
2.06x
Debt/Equity
N/A
Debt/Assets
0.0%
Interest Coverage
4.60x
Long-term Debt
2.5B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-09T12:30:35.731342 |
Data as of: 2026-03-31 |
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