Planet Fitness Inc (PLNT)
Return on total capital
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 283,401 | 238,545 | 129,644 | 67,813 | 216,311 |
| Long-term debt | US$ in thousands | 1,962,870 | 1,978,130 | 1,740,270 | 1,751,430 | 1,687,500 |
| Total stockholders’ equity | US$ in thousands | -115,649 | -199,012 | -645,355 | -705,869 | -706,455 |
| Return on total capital | 15.34% | 13.41% | 11.84% | 6.49% | 22.05% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $283,401K ÷ ($1,962,870K + $-115,649K)
= 15.34%
Planet Fitness Inc's return on total capital has shown fluctuations over the past five years. The return on total capital increased from 6.04% in 2020 to 14.24% in 2021, indicating an improvement in the company's ability to generate returns from its total capital. However, there was a slight decline in 2022 to 13.04% before increasing again to 15.06% in 2023.
The significant jump in return on total capital from 2019 (23.53%) to 2020 (6.04%) suggests that there may have been some one-time factors affecting the return in 2019, which normalized in 2020, leading to a lower return. The subsequent recovery and improvement in returns in the following years show that the company's management may have taken steps to enhance capital efficiency and profitability.
Overall, the trend in return on total capital for Planet Fitness Inc indicates variability but generally positive performance in recent years, with the company making efforts to optimize its capital utilization and generate improved returns for its investors.