Planet Fitness stock is in an unusual spot for investors, with the share price down sharply over the past year while both a Discounted Cash Flow (DCF) intrinsic value estimate and earnings based multiples point to the shares trading at a discount to their implied worth.

• Over the last 12 months, Planet Fitness shares have declined 49.8%, which puts recent valuation concerns firmly in focus for anyone already holding or considering the stock.
• Recent concerns around slower membership growth, a shift in marketing that upset parts of the core customer base, and new securities class actions may weigh on how confidently the market prices future cash flows.
• On Simply Wall St’s broader checks, Planet Fitness screens as undervalued in 5 of 6 valuation tests. This means several different methods currently point to a cheaper than usual entry price.

The issue now is whether Planet Fitness’s current market price properly reflects these risks or if the intrinsic value case for the stock still suggests meaningful upside from here.

Is Planet Fitness Still Cheap on Cash Flow?

The Discounted Cash Flow (DCF) model for Planet Fitness uses projected free cash flows to estimate what the stock could be worth based on today’s money. Planet Fitness generated last twelve month free cash flow of about $260.9 million, and analysts are assuming growing cash flows over time rather than a shrinking business. On that basis, the 2 Stage Free Cash Flow to Equity model points to an intrinsic value of about $94.79 per share in $.

Compared with the current share price, this implies the stock trades at a 41.7% discount to the DCF estimate, so Planet Fitness screens as undervalued on this cash flow view. The recent securities class actions following weaker than expected Q1 membership trends help explain why the market price sits below the model’s valuation, as investors weigh legal and growth uncertainties against the projected cash flows.

Overall, the DCF workup indicates that, based on this model, Planet Fitness stock appears undervalued relative to the cash flows analysts expect it to produce.

Our Discounted Cash Flow (DCF) analysis suggests Planet Fitness is undervalued by 41.7%. Track this in your watchlist or portfolio, or discover 45 more high quality undervalued stocks.

Is Planet Fitness Still Cheap on Earnings?

P/E is a useful check for Planet Fitness because earnings remain a key focus for investors following the recent share price drop and legal headlines. The stock currently trades on a P/E of about 19.1x, compared with a Hospitality industry average of around 24.1x and a peer group average of roughly 29.4x. This means the market is pricing Planet Fitness at a lower multiple than many comparable stocks.

Simply Wall St’s fair P/E estimate for Planet Fitness, which looks at its growth profile, margins, size and risk, sits at about 21.4x. That is modestly above the current 19.1x level, and this framework indicates the shares are trading at a discount to what could be considered a reasonable multiple for the business.

On the P/E multiple alone, Planet Fitness stock currently appears undervalued relative to both its tailored fair ratio and broader industry benchmarks.

The Planet Fitness Narrative: What Would Justify Today's Price?

Simply Wall St Narratives for Planet Fitness pick up where the valuation work leaves off by spelling out what kind of growth, margins and earnings path would need to hold for the stock to be worth materially more or less than today's price, and they sit on the Community page. Each Narrative sets out Planet Fitness' implied fair value as a thesis about the business that you can revisit over time, rather than a one off snapshot.

Community views on Planet Fitness are split between members who see reset-driven upside and others who think recent headwinds still matter more.

Bull case: 17% undervalued

"Rising Black Card penetration, combined with proven ability to implement price increases with minimal impact on churn, signals future near-term potential for further price hikes at this higher margin tier..."

Bear case: 23% overvalued

"The national rollout of streamlined online membership cancellation, while positioned as member-friendly, is already translating into structurally higher churn and elevated attrition..."

Do you think there's more to the story for Planet Fitness? Head over to our Community to see what others are saying!

The Bottom Line

For Planet Fitness, both the Discounted Cash Flow (DCF) intrinsic value estimate and the earnings multiple view point in the same direction, with the stock screening as undervalued on each framework. That discount exists alongside clear risks around membership trends, brand perception after recent marketing shifts, and ongoing class actions, which could all affect how much of the intrinsic value case is eventually realised. The key question from here is whether membership growth and churn stabilise enough for investors to regain confidence in Planet Fitness’s cash flow path, or whether the current discount is closer to a value trap that reflects those legal and execution risks.

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.