Is There Now An Opportunity In Planet Fitness, Inc. (NYSE:PLNT)?

While Planet Fitness, Inc. (NYSE:PLNT) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$95.91 at one point, and dropping to the lows of US$76.28. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Planet Fitness' current trading price of US$83.70 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Planet Fitness’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Planet Fitness

What's the opportunity in Planet Fitness?

Planet Fitness appears to be overvalued by 35% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$83.70 on the market compared to my intrinsic value of $62.06. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since Planet Fitness’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Planet Fitness?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to more than double over the next couple of years, the future seems bright for Planet Fitness. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? PLNT’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe PLNT should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on PLNT for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for PLNT, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Planet Fitness, you'd also look into what risks it is currently facing. Case in point: We've spotted 2 warning signs for Planet Fitness you should be aware of.

If you are no longer interested in Planet Fitness, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.