We feel now is a pretty good time to analyse Yatsen Holding Limited's (NYSE:YSG) business as it appears the company may be on the cusp of a considerable accomplishment. Yatsen Holding Limited, together with its subsidiaries, engages in the development and sale of beauty products under the Perfect Diary, Little Ondine, Pink Bear, Abby's Choice, GalÃnic, DR.WU, Eve Lom, and EANTiM brands in the People's Republic of China. With the latest financial year loss of CN¥748m and a trailing-twelve-month loss of CN¥922m, the US$352m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Yatsen Holding's 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.
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 2023, before turning a profit of CN¥283m in 2024. So, the company is predicted to breakeven approximately a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 135% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
NYSE:YSG Earnings Per Share Growth May 24th 2024
We're not going to go through company-specific developments for Yatsen Holding given that this is a high-level summary, but, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
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 typically has high 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:
This article is not intended to be a comprehensive analysis on Yatsen Holding, so if you are interested in understanding the company at a deeper level, take a look at Yatsen Holding's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:
Historical Track Record: What has Yatsen Holding's 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 Yatsen Holding'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.