$30.00
$64.00
bear $30.00
base $47.00
bull $64.00
margin of safety $27.00
market price* $50.92
Planet Fitness runs and franchises low-price, high-volume gyms. At December 31, 2025 there were 2,896 clubs: 2,604 owned by franchisees and 292 owned by the company, in all 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico, Australia and Spain. 2025 revenue was $1.32 billion: about $546 million from dues at company-owned clubs, $381 million from franchise royalties and fees, about $310 million from equipment sold to franchisees (franchisees must generally replace equipment every five to nine years), and $87 million from the national advertising fund. Members at all clubs paid $5.3 billion in dues and annual fees in 2025 (system-wide sales), and same-club sales rose 6.7% after 5.0% in 2024. Owner earnings. We measure what the business earns for its owners as operating cash flow, less working-capital swings, less stock compensation, less the capital spending needed to keep the business at its current size. Per share (Class A shares plus the exchangeable Class B shares, which own the same economics), that comes to $1.24 in 2018, $1.56 in 2019, a loss of $0.39 in 2020 when clubs were closed by the pandemic, $1.26 in 2021, $2.11 in 2022, $2.18 in 2023, $2.44 in 2024 and $2.90 in 2025. We anchor on the median of 2023 to 2025, or $2.44, because revenue jumped from $587 million to $937 million in 2022 and that year is the step-up into the current business; earlier years describe a smaller company. Three points on accounting: (1) cash paid to pre-IPO owners under tax benefit arrangements ($54.3 million in 2025) is a real cost and stays in; (2) under our formula most capital spending counts as upkeep ($148 million of $164 million in 2025), which is cautious for a company that also builds new company-owned clubs; (3) stock compensation is small ($12.3 million). Results for the first half of 2026 support the level: revenue of $702 million versus $618 million a year earlier and operating cash flow of $193 million versus $178 million. Growth reconciliation. Owner earnings per share grew 18.7% in 2025. The base case assumes only 5.4% a year for the first three years, below that trailing rate, because it credits only growth that is already contracted. As of December 31, 2025 franchisees were contractually obligated under signed development and franchise agreements to open about 750 more clubs, more than 500 of them within three years. Franchisees fund those clubs, and the club count has already grown from 2,254 at the end of 2021 to 2,896. We assume owner earnings rise roughly in line with club count: about 5.4% a year for three years (500 clubs on 2,896), then about 3.5% a year for two years for the remaining 250, then flat. We give no credit for buybacks, price increases, same-club sales growth, or clubs beyond those contracted, because none of these is locked in. Base case, $47 per share. Owner earnings start at $2.44, rise to about $3.06 by year five, and stay there. About $415.8 million of tax benefit payments are scheduled ($55.5 million in 2026, roughly $41 to $47 million a year through 2030, and $184.6 million after 2030). When they run off in the mid-2030s, owner earnings rise by roughly $0.50 per share, which we credit from year ten. We assume the earnings persist for 25 years beyond year ten and then end, because we can document a franchise system only in the decades already observed. Bear case, $30 per share. No growth: the 750 contracted clubs do not lift earnings, and owner earnings sit at $2.11 (the lowest full year since 2022) for nine years, then $2.61 after the tax benefit payments end, fading to zero after 15 years beyond year ten. The company carries $2.51 billion of securitized notes, with about $923 million of principal due at the 2029 anticipated repayment date. The notes contain early-repayment triggers tied to debt service coverage and system-wide sales, so a weak stretch could force cash to go to debt paydown rather than to owners. This case reflects that leverage in a shorter earnings life; we do not deduct debt separately, because interest is already taken out of cash flow. Bull case, $64 per share. Owner earnings start at the 2025 level of $2.90, the contracted clubs open on schedule (5.4% a year for three years, then 3.5% for two), and same-club sales keep rising at about 3% a year for five years, less than the 5.0% and 6.7% of the last two years. Earnings are then flat and persist for 30 years beyond year ten, with the same $0.50 lift when the tax benefit payments end. What would make this wrong. About 55% of the base value sits in years ten to thirty-five, so it depends on the franchise system lasting. Franchisees may delay openings even though contracted (we saw only 7 clubs debranded, sold or consolidated in 2025 against 181 opened or acquired). A pandemic-style closure made 2020 owner earnings negative, and the company borrowed heavily against its brand. Leverage is high, and refinancing terms in 2029 to 2031 are unknown. We could not match some line items in the older cash flow statements to the current presentation, and grouped working-capital lines consistently across years.