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The Beauty Health Company's (NASDAQ:SKIN) Shift From Loss To Profit

·3 min read

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. The US$2.9b market-cap company posted a loss in its most recent financial year of US$30m and a latest trailing-twelve-month loss of US$153m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Beauty Health's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Beauty Health

Beauty Health is bordering on breakeven, according to the 6 American Personal Products analysts. They expect the company to post a final loss in 2021, before turning a profit of US$16m in 2022. Therefore, the company is expected 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 73%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving Beauty Health's growth isn’t the focus of this broad overview, however, bear 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 aspect worth mentioning. Beauty Health currently has no debt on its balance sheet, which is rare for a loss-making growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

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

  1. Historical Track Record: What has Beauty Health's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

  2. 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.

  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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.