Everyman Media Group (LON:EMAN): A Hidden Gem Poised for a Turnaround

Everyman Media Group (LON:EMAN), a leading UK cinema operator, has quietly built a foundation for resurgence amid a challenging backdrop. Despite short-term profitability headwinds, the company's robust revenue growth, strategic expansion, and an enviable film slate for 2025 suggest it is undervalued and primed for a rebound. Here's why investors should take notice now.

Revenue Growth: A Clear Uptick in Momentum

Everyman's financials reveal a compelling story of growth. In the year ending January 2025, revenue surged 17.9% to £107.2 million, driven by a 15% rise in admissions to 4.3 million and higher average spend per customer. The Food & Beverage (F&B) segment also delivered, with spend per head climbing 3.4% to £10.64, reflecting successful menu innovations and technology upgrades like QR code ordering. Even the average ticket price edged up 2.8% to £11.98, underscoring pricing power in a competitive market.

This momentum extends into 2025. Management noted “positive momentum in Q1 2025” driven by the box-office hit Bridget Jones: Mad About the Boy. With two new venues opened in 2025 (Brentford and The Whiteley) and a 65% surge in membership to 56,486, the company is scaling its operations while deepening customer loyalty.

Strategic Expansion: Building Scale and Market Share

Everyman's expansion playbook is paying off. Over the past two years, it has opened five new venues, including high-profile locations like Cambridge and Stratford International. By 2026, it plans to add two more, bringing total screens to over 150. This growth isn't just about size—it's about market share. The company's share rose to 5.4% in 2024, a 12.5% jump from 2023, signaling a competitive edge in a consolidating industry.

The strategic focus on prime locations—such as The Whiteley in Bayswater, a luxury shopping destination—ensures access to affluent audiences. Meanwhile, its premium “cinema-as-hospitality” model, featuring gourmet dining and private screening rooms, differentiates it from rivals like Cineworld.

Film Slate Catalysts: 2025's Blockbuster Backlog

The single biggest catalyst for Everyman's turnaround is its 2025 film slate, which includes marquee titles like Mission: Impossible – The Final Reckoning, Lilo & Stitch, Avatar: Fire and Ash, and Downton Abbey 3. These films, alongside tentpoles like Superman and Wicked: For Good, promise to drive attendance and box-office revenue.

Crucially, this slate is a stark contrast to 2024, when delayed releases from the 2023 WGA and SAG-AFTRA strikes left theaters underutilized. Management has stated that 2025's schedule is “well-balanced,” reducing the risk of uneven performance.

Addressing Profitability Concerns: A Short-Term Hurdle

Critics will point to Everyman's widening net loss of £8.54 million in 2024, up from £2.8 million in 2023. However, this is largely a function of one-time costs and inflationary pressures. Utility expenses rose £1.2 million due to expiring fixed-rate contracts, while labor costs increased £1.5 million as the National Living Wage rose.

The good news? These pressures are easing. Utility costs are expected to drop in 2025, and the company has secured long-term supplier agreements to mitigate future volatility. Meanwhile, free cash flow turned positive in 2024 (£6.1 million) after years of deficits, and net debt fell to £18.1 million—a 6.7% reduction from 2023.

Why Invest Now? The Undervalued Play

Everyman trades at a price-to-sales ratio of just 0.8x, far below peers like AMC Entertainment (which trades at 2.3x). This discount ignores its superior margins (Adjusted EBITDA of £16.2 million despite higher costs) and disciplined balance sheet. With revenue poised to grow 11% annually over the next two years (outpacing the UK entertainment sector's 4.4% average), the stock is primed for re-rating.

Final Word: A Buy at Current Levels

Everyman Media Group is a contrarian play on the UK cinema market. Its growth in revenue, market share, and operational efficiency, coupled with 2025's blockbuster slate, position it for a turnaround. While profitability challenges linger, they are manageable and temporary. Investors who act now can capitalize on a stock that's undervalued and set to benefit from a perfect storm of expansion, film hits, and cost discipline.

Action: Buy EMAN shares at current levels. Target price: £150 within 12 months. Risk: Delayed venue openings or underperformance of key films.