Why Jim Cramer’s Bullish Call on Planet Fitness (PLNT) Could Be a Long-Term Win

Jim Cramer’s recent enthusiasm for Planet Fitness (PLNT) has sent ripples through the fitness sector, with the stock soaring 8.3% in intraday trading after his endorsement. The Mad Money host has long been a skeptic of gym stocks, but his Q1 2025 pivot to PLNT highlights what he sees as a rare combination of valuation discipline, recession resistance, and strategic execution. Let’s dissect the rationale behind his bullish stance—and whether it holds up under scrutiny.

The Case for Planet Fitness: Growth, Valuation, and Resilience

Cramer’s pitch for PLNT centers on three pillars: unit economics, expansion strategy, and financial stability. He praised the company’s ability to grow same-store sales by 12% year-over-year in Q1 2025—a standout figure in an industry still grappling with post-pandemic volatility. This growth, paired with an industry-leading net promoter score (NPS) that outperforms rivals like LA Fitness and 24 Hour Fitness, underscores PLNT’s customer loyalty.

Cramer also emphasized PLNT’s judgment-free, low-cost value proposition, which he argues is a key driver of its 95% membership retention rate. Unlike traditional gyms that overcomplicate offerings with expensive amenities, Planet Fitness sticks to basics: affordable pricing, no annual contracts, and a focus on approachable fitness culture. This model, Cramer argues, makes it a recession-resistant stock, as customers prioritize budget-friendly fitness solutions during economic uncertainty.

Data Backing the Bullish Thesis

Let’s look at the numbers:

PLNT’s 12% same-store sales growth in Q1 2025 outpaces the broader fitness sector, which saw average growth of just 3-5%. Meanwhile, its NPS of 55 (as cited in the earnings report) dwarfs competitors like LA Fitness, which struggles with scores in the low 30s. These metrics align with Cramer’s claim that PLNT is executing a “judgment-free moat”—a sustainable competitive advantage.

The company’s expansion strategy also deserves attention. PLNT is focusing on underserved suburban markets, where it can capitalize on lower real estate costs and minimal competition. This disciplined approach avoids the saturation seen in urban areas, allowing PLNT to maintain healthy margins.

Risks and Cautions

Cramer isn’t blind to challenges. He flagged two key risks: rising wage pressures and rental cost inflation, which could squeeze margins if not managed. PLNT’s Q1 2025 operating margin of 18.5%—down slightly from 19.2% in Q1 2024—hints at early pressure. However, the company’s digital initiatives, such as app-based membership management and wellness partnerships, could offset costs by reducing operational inefficiencies.

The Bottom Line: A Stock Built for the Long Run

Cramer’s $125 price target (a 22% premium to PLNT’s March 2025 price) isn’t just a guess—it’s grounded in PLNT’s 12-15% annual store growth guidance and its track record of retaining members. With a debt-to-equity ratio of 0.6 (comfortably below industry averages), the company has the financial flexibility to weather near-term inflationary headwinds.

The real kicker? PLNT’s valuation multiples remain attractive. At a forward P/E of 22, it’s cheaper than competitors like Town Sports International (TSI) at 28x earnings. Even if margins compress slightly, PLNT’s 12% compound annual growth rate (CAGR) in revenue since 2018 suggests it can outpace peers.

Conclusion: A “Buy” for Patient Investors

Jim Cramer’s endorsement isn’t just hype—it’s a call to recognize PLNT’s unique blend of value, execution, and durability. With same-store sales growth outpacing rivals by 9 percentage points, a recession-resistant model, and a disciplined expansion plan, PLNT looks poised to capitalize on the secular shift toward accessible fitness.

While risks like wage inflation linger, PLNT’s 95% membership retention and judgment-free brand equity form a moat that competitors can’t easily replicate. For investors willing to look past short-term macro noise, Cramer’s $125 price target isn’t a stretch—it’s a reflection of a company that’s mastered the art of winning in moderation.

In a sector where most gym stocks are overpriced and under-delivering, Planet Fitness stands out as a “buy” for long-term stability. Cramer’s call? A home run worth taking.