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, engages in operation of a chain of gym facilities under the Gym Group brand name in the United Kingdom. With the latest financial year loss of UK£19m and a trailing-twelve-month loss of UK£22m, the UK£190m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Gym Group's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Gym Group

According to the 6 industry analysts covering Gym Group, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of UK£1.6m in 2025. The company is therefore projected 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 90%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Gym Group's upcoming projects, but, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Gym Group currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Gym Group's case is 49%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Gym Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – Gym Group's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:

1. 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.

2. 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.

3. 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.