With the business potentially at an important milestone, we thought we’d take a closer look at Evolus, Inc.’s (NASDAQ:EOLS) future prospects. Evolus, Inc., a performance beauty company, provides medical aesthetic products for physicians and their patients in the United States. The US$141m market-cap company posted a loss in its most recent financial year of US$90m and a latest trailing-twelve-month loss of US$82m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Evolus will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company’s growth and when analysts expect it to become profitable.
Evolus is bordering on breakeven, according to the 7 American Pharmaceuticals analysts. They expect the company to post a final loss in 2021, before turning a profit of US$15m in 2022. The company is therefore projected to breakeven around 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 69% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Evolus’ growth isn’t the focus of this broad overview, but, keep in mind that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we would like to bring into light with Evolus is its debt-to-equity ratio of 170%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are key fundamentals of Evolus 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 Evolus, take a look at Evolus’ company page on Simply Wall St. We’ve also put together a list of important aspects you should look at:
- Historical Track Record: What has Evolus’ 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.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Evolus’ 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.
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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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