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Transaction Details

Company: Planet Fitness
Yahoo Beta:0.00
Industry:Sporting activities

Company Description:  PLNT franchises and operates fitness centers.

Purchase Date:27 Jan 2016 Sale Date:15 Aug 2016
Purchase Price:$13.70 Sale Price:$21.83
  --Split Adjusted:$13.70  --Split Adjusted:$21.83
Shares Purchased:0 Shares Sold:240
  --Split Adjusted:0  --Split Adjusted:240
Transaction Fee:$6.95 Transaction Fee:$7.06
Price Range (6 Months Prior):    Price Range (6 Months After):    
High$16.89 High$0.00
Date29 Oct 2015 Date01 Jan 1996
Low$13.57 Low$0.00
Date27 Jan 2016 Date01 Jan 1996
S&P (Purchase Date):$1,882.95 S&P (Sale Date):$2,192.31

Timing:  We bought at the six month low.
Reason:  PLNT has strong financial metrics and shows the potential for strong growth going forward.

Reason:  PLNT reached our target price. Despite beating top and bottom line for Q2, there are several growth concerns going forward: 1) Q2 YoY system-wide same store sales growth slowed to 8%, lowest since 2013. As barriers to entry remain low and rising competition (Vasa), this can be troubling to future sales. 2) Lower-than-expected store base growth (36 actual vs. 55 projected). For the first time, Planet Fitness reported that they were behind schedule for new store openings through Q2. 3) Black card memberships remained flat YoY despite increased efforts to convert new and existing members, resulting in a 10% increase in cost of sales. 4) Beating Q2 revenue was reliant on PLNT's largest revenue segment, equipment sales, jumping 25% YoY. Franchise stores must purchase equipment directly from corporate every four years. With replacement sales accounting for 51% of all equipment sales, this was largely attributed to a spike in new stores in 2010. This provides unsustainable growth in equipment sales along with lagging new store growth going forward.

S&P Gain: 16.43 % Annualized Gain: 32%
Stock Gain: 59.34 % Annualized Gain: 134.01%

Net Holding Return ($): $1,937.19
Net Holding Return (%): 58.79 %