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1. Company Snapshot

1.a. Company Description

The Gym Group plc operates a chain of health and fitness facilities in the United Kingdom.As of December 31, 2021, it operated 202 gym sites under The Gym Group brand.The company was founded in 2007 and is based in Croydon, the United Kingdom.

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1.b. Last Insights on GYM

The Gym Group plc faced challenges in recent months, driven by a sluggish consumer spending environment and intense competition in the fitness industry. A recent report raised questions about the company's growth prospects, potentially impacting investor sentiment. Additionally, with no recent earnings release providing a positive update, concerns may linger about the company's ability to drive sales growth. According to a recent note, some analysts are scrutinizing the company's current valuation. No share buyback program has been announced.

1.c. Company Highlights

2. PureGym's Financial Performance Misses Estimates

PureGym reported revenues with EPS coming in at '-0.00354', missing estimates of '0.0395'. The company's financial performance was characterized by revenue growth, though exact figures were not provided. The EV/EBITDA ratio stands at 7.89, indicating the market's expectations for the company's future earnings. The 'Free Cash Flow Yield (%)' is 23.12, suggesting a significant cash generation capability relative to its market value.

Publication Date: Sep -23

📋 Highlights
  • Strong Financial Growth: Revenue rose 8% to GBP 121 million (excluding FX), driven by 5% membership growth and GBP 21.16 average revenue per member, with EBITDA up 24% to GBP 27.4 million.
  • Cost Discipline & Efficiency: Site costs fell 1% YoY due to lower energy prices and energy-saving measures, while central costs grew 7%, reflecting strategic investments in growth.
  • Robust Free Cash Flow: Free cash flow reached GBP 25.1 million, reducing net debt by GBP 10.1 million to GBP 51.2 million, with a net debt-to-EBITDA ratio of 1x.
  • Expansion Momentum: 14–16 new sites planned for 2025 (3-year 50-site plan), with new sites achieving 30% ROIC on average, and GBP 12.6 million allocated to new site CapEx in H1.
  • Positive Outlook: Trading momentum into July–August supports EBITDA guidance at the top of market estimates, with GBP 50 million total CapEx expected for FY2025 and GBP 19.9 million spent in H1.

Valuation Metrics and Future Expectations

The P/E Ratio is 58.86, and the P/S Ratio is 1.15, indicating that the stock might be overvalued relative to its earnings and sales. The ROE (%) is 3.4, and ROIC (%) is 7.72, suggesting that the company is generating returns, albeit not exceptionally high. The Net Debt / EBITDA is 4.78, showing a considerable leverage position relative to its EBITDA.

Operational Highlights and Outlook

The company is accelerating site openings, targeting 14–16 new gyms in 2024, and is confident about its pipeline for 2025–2026. Pricing adjustments are aligned with inflation, and mature estate investments are prioritized within current budgets. Marketing costs remain around 5% of revenue, with a focus on local efficiency. The B2B2C pilot is a strategic initiative to boost volume across sites.

3. NewsRoom

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With 74% institutional ownership, The Gym Group plc (LON:GYM) is a favorite amongst the big guns

Nov -30

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The Gym Group plc (LON:GYM) Shares Could Be 49% Below Their Intrinsic Value Estimate

Oct -01

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UK Value Picks 3 Stocks Priced Below Estimated Worth

Sep -15

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Gym Group First Half 2025 Earnings: EPS: UK£0.019 (vs UK£0.001 in 1H 2024)

Sep -14

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The Gym Group on track for up to 16 openings amid strong Gen Z demand

Sep -10

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Do Fundamentals Have Any Role To Play In Driving The Gym Group plc's (LON:GYM) Stock Up Recently?

Sep -06

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Should You Investigate The Gym Group plc (LON:GYM) At UK£1.44?

Aug -04

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The Gym Group plc (LON:GYM) Stock's Been Sliding But Fundamentals Look Decent: Will The Market Correct The Share Price In The Future?

Mar -30

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.91%)

6. Segments

Membership

Expected Growth: 9%

The Gym Group plc's 9% membership growth is driven by increasing demand for affordable fitness, successful rollout of new sites, and enhanced member experience through digital innovations. Additionally, the company's focus on 24/7 operations, no-contract memberships, and competitive pricing have attracted a wider customer base, contributing to the growth.

Rental Income from Personal Trainers

Expected Growth: 7%

Rental income from personal trainers at The Gym Group plc is driven by increasing demand for flexible, low-cost fitness options, growing popularity of personal training, and strategic partnerships with trainers. Additionally, the company's expanding gym footprint, improved operational efficiency, and competitive pricing strategy contribute to the 7% growth rate.

Ancillary

Expected Growth: 8%

The Gym Group plc's ancillary segment growth of 8% is driven by increasing demand for premium services, strategic partnerships with health and wellness providers, and effective cross-selling of additional products to existing members, such as personal training and small group classes, resulting in higher average revenue per user.

7. Detailed Products

Multi-Gym Membership

A flexible membership that allows access to multiple gyms across the UK

Single-Gym Membership

A membership that grants access to a single gym location

Day Passes

A one-day pass that allows access to any gym

Personal Training

One-on-one training sessions with certified trainers

Small Group Training

Group fitness classes with certified trainers

Online Fitness Classes

Virtual fitness classes accessible from anywhere

8. The Gym Group plc's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for The Gym Group plc is medium due to the presence of alternative fitness options such as running, yoga, and home workouts. However, the convenience and variety of services offered by The Gym Group plc mitigate this threat.

Bargaining Power Of Customers

The bargaining power of customers is low due to the lack of switching costs and the availability of membership options that cater to different customer needs.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the presence of multiple suppliers for equipment and services, giving The Gym Group plc negotiating power.

Threat Of New Entrants

The threat of new entrants is medium due to the moderate barriers to entry, including the need for significant capital investment and regulatory compliance.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of established competitors such as Virgin Active and Nuffield Health, as well as the increasing popularity of boutique fitness studios.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 40.60%
Debt Cost 5.34%
Equity Weight 59.40%
Equity Cost 11.98%
WACC 9.28%
Leverage 68.36%

11. Quality Control: The Gym Group plc passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Sats

A-Score: 5.2/10

Value: 5.5

Growth: 5.9

Quality: 5.6

Yield: 1.2

Momentum: 9.5

Volatility: 3.7

1-Year Total Return ->

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Profoto

A-Score: 4.5/10

Value: 9.0

Growth: 2.1

Quality: 6.9

Yield: 8.8

Momentum: 0.0

Volatility: 0.0

1-Year Total Return ->

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Stock-Card
Tivoli

A-Score: 4.3/10

Value: 2.4

Growth: 5.7

Quality: 5.4

Yield: 0.6

Momentum: 2.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
The Gym Group

A-Score: 3.8/10

Value: 5.5

Growth: 6.6

Quality: 3.4

Yield: 0.0

Momentum: 3.5

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Harvia

A-Score: 3.8/10

Value: 1.8

Growth: 5.1

Quality: 6.6

Yield: 3.8

Momentum: 2.0

Volatility: 3.3

1-Year Total Return ->

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Stock-Card
Focusrite

A-Score: 3.2/10

Value: 6.1

Growth: 3.1

Quality: 4.5

Yield: 3.1

Momentum: 1.5

Volatility: 1.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.43$

Current Price

1.43$

Potential

-0.00%

Expected Cash-Flows