Yahoo Finance The Gym Group plc's (LON:GYM) Profit Outlook
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 operates a chain of health and fitness facilities in the United Kingdom. On 31 December 2022, the UK£178m market-cap company posted a loss of UK£19m for its most recent financial year. Many investors are wondering about the rate at which Gym Group will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
View our latest analysis for Gym Group
According to the 5 industry analysts covering Gym Group, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of UK£5.3m in 2024. So, the company is predicted to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 96%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Gym Group's upcoming projects, however, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with Gym Group is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Gym Group's case is 52%. 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 pertinent factors you should further examine:
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.
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.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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