With the business potentially at an important milestone, we thought we'd take a closer look at The Beauty Health Company's (NASDAQ:SKIN) future prospects. The Beauty Health Company designs, develops, manufactures, markets, and sells aesthetic technologies and products worldwide. With the latest financial year loss of US$375m and a trailing-twelve-month loss of US$339m, the US$1.9b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Beauty Health's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Beauty Health is bordering on breakeven, according to the 11 American Personal Products analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$33m in 2022. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 35% year-on-year, on average, 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 Beauty Health's upcoming projects, however, take into account 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. Beauty Health currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are key fundamentals of Beauty Health 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 Beauty Health, take a look at Beauty Health's company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine:
Valuation: What is Beauty Health 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 Beauty Health 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 Beauty Health’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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