Public Companies

Breakeven On The Horizon For Xponential Fitness, Inc. (NYSE:XPOF)

Xponential Fitness, Inc. (NYSE:XPOF) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Xponential Fitness, Inc., through its subsidiaries, operates as a boutique fitness franchisor in the United States and internationally. The company’s loss has recently broadened since it announced a US$14m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$20m, moving it further away from breakeven. Many investors are wondering about the rate at which Xponential Fitness 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.

Consensus from 7 of the American Hospitality analysts is that Xponential Fitness is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$32m in 2022. The company is therefore projected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 57% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NYSE:XPOF Earnings Per Share Growth October 27th 2021

We're not going to go through company-specific developments for Xponential Fitness given that this is a high-level summary, however, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Xponential Fitness currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Xponential Fitness to cover in one brief article, but the key fundamentals for the company can all be found in one place – Xponential Fitness' company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

  1. Valuation: What is Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness’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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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