Planet Fitness (PLNT) Expected to Beat Earnings Estimates: What to Know Ahead of Q3 Release

Wall Street expects earnings to decline year over year on stronger earnings when Planet Fitness (PLNT) reports results for the quarter ending September 2024. While this widely held consensus estimate is important in assessing a company’s earnings picture, what is powerful about its stock price in the short term is how actual results compare to these estimates.

The stock could move higher if these key numbers beat expectations for its upcoming earnings report, which is expected to be released on November 7th. On the other hand, if they don’t materialize, the stock could fall.

While the sustainability of the immediate price movement and future earnings expectations will mostly depend on management’s discussion of business conditions at earnings call, it is worth limiting the potential for a positive EPS surprise.

Zacks Consensus Estimate

The fitness center operator is expected to post quarterly earnings of $0.57 per share in its upcoming report, which would represent a year-over-year change of -3.4%.

Revenue is expected to be $284.54 million, up 2.5% from the year-ago quarter.

Assessing trends

Consensus EPS estimates for the quarter have been revised down 0.18% over the past 30 days to current levels. Essentially, this is a reflection of how leading analysts have collectively revised up their initial estimates for the period.

Investors should note that the direction of each covering analyst’s estimate revisions may not always be reflected in the aggregate change.

Whispers about income

Revising estimates ahead of a company’s earnings release provides insight into business conditions in the period as the results are released. This insight is the basis of our proprietary surprise prediction model, the Zacks Earnings ESP (Expected Surprise Prediction).

The Zacks Earnings ESP compares the best estimate to the Zacks Consensus Estimate for the quarter; The most accurate estimate is an upgrade of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates just before an earnings release have the most up-to-date information, which could potentially be more accurate than what they and other consensus members previously predicted.

Thus, a positive or negative Earnings ESP theoretically indicates the likely deviation of actual earnings from consensus estimates. However, the predictive power of the model is significant only for positive ESP readings.

A positive earnings ESP is a strong predictor of earnings growth, especially when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of the Earnings ESP.

Please note that negative Earnings ESP values ​​do not indicate a lack of profit. Our research shows that it is difficult to predict earnings performance with any degree of confidence for stocks with a negative Earnings ESP and/or a Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How have the numbers changed for Planet Fitness?

For Planet Fitness, the Best Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have become bullish on the company’s earnings prospects recently. As a result, the earnings ESP was +0.33%.

On the bright side, the stock currently has a Zacks Rank #3.

Therefore, this combination indicates that Planet Fitness is likely to beat consensus EPS estimates.

Is there any clue in the history of earnings surprises?

When calculating estimates of a company’s future earnings, analysts often consider the extent to which it has met past consensus estimates. So, it’s worth taking a look at the history of surprises to gauge its impact on the upcoming issue.

For its last reported quarter, Planet Fitness was expected to report earnings of $0.65 per share when it actually reported earnings of $0.71, delivering a surprise of +9.23%.

Over the last four quarters, the company has topped consensus EPS estimates four times.

Bottom line

An increase or decrease in earnings cannot be the only reason a stock moves up or down. Many stocks end up losing ground despite declining earnings due to other factors that disappoint investors. Likewise, unforeseen catalysts are helping a number of stocks rise despite declining earnings.

However, betting on stocks that are expected to beat earnings expectations does increase the odds of success. That’s why it’s worth checking a company’s ESP and Zacks Rank ahead of its quarterly releases. Be sure to use our Earnings ESP Filter to identify the best stocks to buy or sell before they go public.

Planet Fitness looks like an attractive candidate with better earnings. However, investors should pay attention to other factors to bet on or stay away from this stock ahead of its earnings release.

Expected results of an industry player

Marriott Vacations Worldwide (VAC), another company in the Zacks Vacation & Leisure industry, is expected to report earnings per share of $1.53 for the quarter ended September 2024. This estimate indicates a year-over-year change of +27.5%. Revenue for the quarter is expected to be $1.27 billion, up 6.9% from the year-ago quarter.

Consensus EPS estimates for Marriott Vacations Worldwide have remained unchanged over the past 30 days. However, the higher best estimate resulted in an earnings ESP of 1.64%.

When combined with a Zacks Rank #3 (Hold), this Earnings ESP indicates that Marriott Vacations Worldwide is likely to beat consensus EPS estimates. Over the last four quarters, the company has topped consensus EPS estimates twice.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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