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Moody's Gets Pumped About Planet Fitness, Upgrades Outlook

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Moody's Gets Pumped About Planet Fitness, Upgrades Outlook
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Moody's Investors Services, the notable credit rating agency, boosted their ratings outlook on Planet Fitness Inc (NYSE: PLNT)'s debt due to the company's strong operating performance and an improving financial profile.

Moody's upgraded Planet Fitness' debt rating from Stable to Positive while simultaneously boosting their Probability of Default Rating (PDR) for the company from B2-PD to B1-PD. In addition, the company's Speculative Grade Liquidity rating was boosted from SGL-2 to SGL-1.

Planet Fitness' B1 Corporate Family Rating (CFR) and B1 rating on its Secured Bank Credit Facilities remain unchanged.

Moody's justified its outlook based on expectations for Planet Fitness to see strong EBITDA and cash flow from operations growth. Of particular note, the company's free cash flow-to-debt rose above 8 percent. Moreover, Moody's analysis suggests that Planet Fitness will generate about $85 million in free cash flow for the full year 2017, which will grow to $100 million in 2018.

"Planet Fitness is poised to experience another year of strong earnings growth as its franchise based business model allows it to have new club openings that outpace the market which we believe will drive further market share gains and strengthen credit metrics and cash flow," stated Maggie Taylor, a senior vice president with Moody's.

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Image Credit: By Anthony92931 (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

Latest Ratings for PLNT

DateFirmActionFromTo
Aug 2018JP MorganDowngradesOverweightNeutral
Aug 2018WedbushMaintainsNeutralNeutral
Jul 2018Bank of AmericaMaintainsBuyBuy

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