Xponential Fitness, Inc. (NYSE:XPOF) On The Verge Of Breaking Even
We feel now is a pretty good time to analyse Xponential Fitness, Inc.'s (NYSE:XPOF) business as it appears the company may be on the cusp of a considerable accomplishment. Xponential Fitness, Inc., through its subsidiaries, operates as a boutique fitness franchisor in North America. On 31 December 2022, the US$1.4b market-cap company posted a loss of US$22m for its most recent financial year. As path to profitability is the topic on Xponential Fitness' 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 Xponential Fitness
According to the 11 industry analysts covering Xponential Fitness, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$36m in 2023. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 78%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Xponential Fitness given that this is a high-level summary, but, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Xponential Fitness is its debt-to-equity ratio of 136%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are key fundamentals of Xponential Fitness 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 Xponential Fitness, take a look at Xponential Fitness' company page on Simply Wall St. We've also compiled a list of important factors you should further examine:
Valuation: What is Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness’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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