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We feel now is a pretty good time to analyse The Gym Group plc's (LON:GYM) business as it appears the company may be on the cusp of a considerable accomplishment. The Gym Group plc, together with its subsidiaries, operates a network of gym facilities under the Gym Group brand name in the United Kingdom. The UK£263m market-cap company posted a loss in its most recent financial year of UK£8.4m and a latest trailing-twelve-month loss of UK£2.1m shrinking the gap between loss and breakeven. The most pressing concern for investors is Gym Group's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for Gym Group
Gym Group is bordering on breakeven, according to the 9 British Hospitality analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of UK£2.0m in 2025. Therefore, the company is expected to breakeven roughly a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 94% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Gym Group given that this is a high-level summary, but, take into account that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. Gym Group currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Gym Group's case is 45%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
There are key fundamentals of Gym Group which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Gym Group, take a look at Gym Group's company page on Simply Wall St. We've also put together a list of important factors you should look at:
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Valuation: What is Gym Group worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Gym Group is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Gym Group’s board and the CEO’s background.
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Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.