Planet Fitness (NYSE: PLNT) system-wide SSS growth of 6.9% was driven by member growth and beat guidance of 5-6% as the company's strong value proposition creates a low risk opportunity for new entrants to the gym category. Total revenue +8% as PLNT delivered upside to our estimates across all operating segments. EBITDA margin expanded 310bps as better-than-expected Franchise growth and new store openings continue to drive an accretive margin mix shift toward the 78% EBITDA margin Franchise business and expense leverage.

Implied Q4 EPS guidance of $0.15-$0.16 is significantly above consensus of $0.13 and implies the potential for upside to consensus estimates into 2016. The stock looks cheap, trading at 6% 2016E FCF yield.

Increased revenue guidance of $318 to $321MM (vs. prior $314 to $316MM) assumes 5-6 incremental store openings.

Cowen analyst, Jerry Gray, recommended buying shares of PLNT "given potential for upside to consensus estimates into 2016" and reiterated his 21 price target. He raised FY16E EPS to $0.61, vs. consensus of $0.57, on flow through of stronger FY15 results and reiterate his $21 price target. No change to the Buy rating

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Shares of Planet Fitness closed at $15.03 yesterday.