Gym Group (LSE:GYM) is a stock with strong momentum in the FTSE All-Share Index. Since bottoming out at 83p in April 2023, it has risen to 186p today.
However, if City forecasts are on the money, the stock could rise another 30% to 242p in the next 12 months. What’s more, all nine analysts covering the stock rate it a Strong Buy.
Why are they so bullish? Let’s dig in a little deeper.
Pressing ahead
As a quick reminder, the group provides affordable 24/7 gym membership through 260+ sites across the UK. Despite more than doubling since 2023, the share price remains 40% lower than before the pandemic (which obviously caused operational havoc).
So the story here is one of rebuilding profitability. And on this front, the group has been making great strides. Last year, net profit jumped 68% to £7.4m on revenue of £244.9m (+8%).
It ended 2025 with 900,000 members, up 4% year on year. However, by the end of February, this figure had grown to 999,000.
Of course, the period after Christmas is always a busy one for gym membership growth (New Year’s resolutions and all that). Nevertheless, the fact the group now has 1m members — up from 796,000 in 2019 — is impressive.
However, not resting on its laurels, the company says it’s “accelerating new site openings programme to take full advantage of the available white space and market growth opportunity”. This will involve opening another 75 sites over the next three years.
Also impressive is that these openings will be funded entirely through free cash flow. Last year, it generated £38.3m in free cash flow, a 10% increase on 2024.
Meanwhile, non-property net debt was reduced by £2m to £59.3m, resulting in an low adjusted leverage ratio of 1.
Finally, the strong momentum has continued into 2026, with revenue up 9% by the end February. Average revenue per member per month increased 5%.
What are the risks?
This operational and financial progress underpins the stock’s move higher since 2023. However, there are a couple of risks worth mentioning here.
The first is that the company faces a lot of competition. Speaking personally, I use my local leisure centre (which has a pool), despite there being a Gym Group facility 15 minutes away. But I have so many options, as a new JD Gym has opened nearby and there are various other fitness centres knocking about.
The second issue is that the stock’s trading at 35 times forward earnings. This isn’t necessarily a problem, as analysts see strong earnings growth lowering this to around 18.5 by 2028. But if growth slows, the stock could quickly retrace, as it’s not cheap on this metric.
Finally, while the firm launched a £10m share buyback in January, there’s no dividend here, so investors will be relying on share price appreciation to make a return.
Fitness boom
Is the stock worth considering? I think so, given that the health and fitness industry is booming right now. Gen Z, which now makes up around 40% of the group’s membership base, are visiting the gym more often per week.
And as potentially millions more people slim down from powerful GLP-1 drugs Mounjaro and Wegovy in the years ahead, the business looks set up for further membership growth.
