SmileDirectClub, Inc.’s (NASDAQ:SDC): SmileDirectClub, Inc. operates a teledentistry platform that provides member’s with a customized clear aligner therapy treatment in the United States and internationally. The US$3.5b market-cap posted a loss in its most recent financial year of US$114.5m and a latest trailing-twelve-month loss of US$123.3m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is SDC’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for SDC.
Consensus from the 13 Medical Equipment analysts is SDC is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$104m in 2023. Therefore, SDC is expected to breakeven roughly 3 years from today. In order to meet this breakeven date, I calculated the rate at which SDC must grow year-on-year. It turns out an average annual growth rate of 76% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for SDC given that this is a high-level summary, however, keep in mind 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 I would like to bring into light with SDC is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in SDC’s case is 53%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are key fundamentals of SDC which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at SDC, take a look at SDC’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should further examine:
- Valuation: What is SDC 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 SDC 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 SmileDirectClub’s board and the CEO’s back ground.
- 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.
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This article by Simply Wall St is general in nature. 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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