Yatsen Holding Limited (NYSE:YSG) About To Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at Yatsen Holding Limited's (NYSE:YSG) future prospects. Yatsen Holding Limited, together with its subsidiaries, engages in the development and sale of beauty products in the People’s Republic of China. With the latest financial year loss of CN¥708m and a trailing-twelve-month loss of CN¥528m, the US$877m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Yatsen Holding will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

According to the 3 industry analysts covering Yatsen Holding, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of CN¥33m in 2025. The company is therefore projected to breakeven around a year 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 129%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Yatsen Holding's growth isn’t the focus of this broad overview, though, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Check out our latest analysis for Yatsen Holding

Before we wrap up, there’s one aspect worth mentioning. Yatsen Holding currently has no debt on its balance sheet, which is quite unusual for a cash-burning 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 key fundamentals of Yatsen Holding 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 Yatsen Holding, take a look at Yatsen Holding's company page on Simply Wall St. We've also put together a list of essential factors you should further research:

1. Valuation: What is Yatsen Holding 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 Yatsen Holding is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Yatsen Holding’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.

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.