SmileDirectClub, Inc.'s (NASDAQ:SDC): SmileDirectClub, Inc. operates a teledentistry platform that provides members with a customized clear aligner therapy treatment in the United States and internationally. On 31 December 2019, the US$1.7b market-cap posted a loss of -US$114.5m for its most recent financial year. As path to profitability is the topic on SDC’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for SDC’s growth and when analysts expect the company to become profitable.
View our latest analysis for SmileDirectClub
SDC is bordering on breakeven, according to the 12 Medical Equipment analysts. They expect the company to post a final loss in 2021, before turning a profit of US$43m in 2022. SDC is therefore projected to breakeven around 2 years from now. 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 53% is expected, which is extremely buoyant. 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, but, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before I wrap up, there’s one aspect worth mentioning. SDC has managed its capital prudently, with debt making up 40% of equity. This means that SDC has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on SDC, so if you are interested in understanding the company at a deeper level, take a look at SDC’s company page on Simply Wall St. I’ve also compiled a list of important 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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