Planet Fitness trades at $113.23 per share and has stayed right on track with the overall market, gaining 8% over the last six months. At the same time, the S&P 500 has returned 4.3%.

Is there a buying opportunity in Planet Fitness, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.

We're swiping left on Planet Fitness for now. Here are three reasons why we avoid PLNT and a stock we'd rather own.

We can better understand Leisure Facilities companies by analyzing their same-store sales. This metric measures the change in sales at brick-and-mortar locations that have existed for at least a year, giving visibility into Planet Fitness’s underlying demand characteristics.

Over the last two years, Planet Fitness’s same-store sales averaged 6.4% year-on-year growth. This performance was underwhelming and suggests it might have to change its strategy or pricing, which can disrupt operations.

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Planet Fitness’s revenue to rise by 10.5%, close to its 12.6% annualized growth for the past five years. This projection doesn't excite us and suggests its newer products and services will not catalyze better top-line performance yet.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Over the next year, analysts predict Planet Fitness’s cash conversion will fall. Their consensus estimates imply its free cash flow margin of 19.5% for the last 12 months will decrease to 14.6%.

Planet Fitness isn’t a terrible business, but it doesn’t pass our bar. That said, the stock currently trades at 37.4× forward P/E (or $113.23 per share). At this valuation, there’s a lot of good news priced in - you can find more timely opportunities elsewhere. We’d recommend looking at an all-weather company that owns household favorite Taco Bell.

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