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Gabriel Cazorla Persson's avatar

I am happy to see that I am not crazy. When I first read the results that morning I was thinking that this is actually good news... but perhaps the stock market does not see it that way, specially the change in strategy. Ouch. If anything, this is even more bullish, since the transition to a higher quality balance sheet and unlocking the cash flow from those mature clubs will make the stock look safer and more attractive. You really need to dig into the numbers to understand this company is undervalued, because it does not look like that from traditional PE ratios or P/B. So my reasoning is, if their numbers improve, even if at the cost of future club growth, share price will go up. All of this not taking into account the positive surprise that could come from franchising. As I see it, it is a huge asymmetrical opportunity. If franchising doesn't work, the business will go on. If it is a success, it's easy money by selling your brand at a very low cost for the company. And PlanetFitness is mainly a franchise, so we have antecedents to know that it can work.

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Felix's avatar

Another strong analysis! Liked reading about the buy back part.

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