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Here's Why Investors Should Retain SmileDirectClub (SDC) Now
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SmileDirectClub, Inc. is gaining from continued innovation and strategic partnerships. The company’s oral care products are currently available at more than 12,500 retail stores across the United States. The company also ended the first quarter of 2022 with better-than-expected revenues, instilling optimism. However, tough competition and a leveraged balance sheet raise apprehension.
In the past year, the Zacks Rank #3 (Hold) stock has declined 87.1% against a 9.5% fall of the industry and a 9.1% drop of the S&P 500.
The renowned oral care company has a market capitalization of $477.38 million. The company projects 25.6% growth for the next five years, ahead of the industry’s projected growth rate of 10.4% and the S&P 500’s estimated 10.8% growth.
Image Source: Zacks Investment Research
Factors At Play
Q1 Upsides: SmileDirectClub’s first-quarter revenues surpassed the Zacks Consensus Estimate. Revenues in the reported quarter increased 20% sequentially, driven primarily by 76,000 initial aligner shipments at an ASP of $18.90. The company liner shipment count was up more than 15% from fourth-quarter 2021 levels. A series of cutting-edge innovations, strategic distribution and insurance partnerships are added positives.
Throughout the quarter, the company saw improvements in both submissions per practice and increases in total practices in its network.
Innovations Aid Growth: SmileDirectClub is focused on developing products to differentiate its offerings in the oral care industry. In May 2022, the company announced the expansion of its best-in-class oral care product offerings with its new Wireless Premium Teeth Whitening Kit. In February 2022, it expanded its award-winning oral care product offerings with the new Stain Barrier that protects teeth with an invisible shield against common staining beverages, including coffee, tea, red wine and soda.
In January 2022, the company announced the expansion of its whitening product line with its new Fast-Dissolving Whitening Strips. In the same month, the company expanded its oral care product offerings with its new Pro Whitening System Plus, featuring a Wireless LED Whitening Light.
Strategic Alliances Add Growth: We are upbeat about SmileDirectClub’s slew of strategic collaborations. In terms of the retail partnership, the company’s oral care products are now available at over 12,500 retail stores nationwide, including Walmart, CVS, Walgreens, and Sam's Club. These partnerships are aimed at serving a highly efficient lead source and brand-building opportunity.
In February 2022, SmileDirectClub partnered with Carestream Dental to utilize their cutting-edge intraoral scanners throughout the company’s global SmileShop footprint and Partner Network locations. The company has also developed a dental partner network and currently has 735 global practices.
Downsides
Operating Loss in Q1: SmileDirectClub’s first-quarter marketing and selling expenses rose 0.4%. The company incurred an adjusted operating loss of $58.9 million in the quarter, wider than the year-ago operating loss of $26.7 million.
Leveraged Balance Sheet: SmileDirectClub’s total debt to capital of 138% at the end of the first quarter stood at an extremely high level. It represented a significant rise from 122.2% at the end of the fourth quarter.
Tough Competitive Landscape: SmileDirectClub competes with a handful of smaller companies that collectively have limited market share in the clear aligner industry, including Candid Co., Byte (Dentsply), and SnapCorrect. With the introduction of the company’s collaborative and wholesale partner network, it also faces competition from more well-established competitors in the traditional orthodontic industry.
Estimate Trend
Over the past 90 days, the Zacks Consensus Estimate for SmileDirectClub’s 2022 loss has moved north to 54 cents.
The Zacks Consensus Estimate for the company’s 2022 revenues is pegged at $622.2 million, suggesting a 2.4% fall from the 2021 figure.
Key Picks
A few better-ranked stocks in the broader medical space are Alkermes plc (ALKS - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Medpace Holdings, Inc. (MEDP - Free Report) .
Alkermes has an estimated long-term growth rate of 25.1%. Alkermes’ earnings surpassed estimates in the trailing four quarters, the average surprise being 350.5%. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alkermes has outperformed the industry over the past year. ALKS has gained 11.1% compared with the industry’s 44.7% decline in the said period.
AMN Healthcare has a long-term earnings growth rate of 1.1%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 15.6%, on average. It currently flaunts a Zacks Rank #2 (Buy).
AMN Healthcare has outperformed its industry in the past year. AMN has gained 5.1% against the industry’s 66.5% fall.
Medpace has a historical growth rate of 27.3%. Medpace’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.1%. It currently has a Zacks Rank #2.
Medpace has outperformed its industry in the past year. MEDP has declined 22.5% compared with the industry’s 66.5% fall.
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Here's Why Investors Should Retain SmileDirectClub (SDC) Now
SmileDirectClub, Inc. is gaining from continued innovation and strategic partnerships. The company’s oral care products are currently available at more than 12,500 retail stores across the United States. The company also ended the first quarter of 2022 with better-than-expected revenues, instilling optimism. However, tough competition and a leveraged balance sheet raise apprehension.
In the past year, the Zacks Rank #3 (Hold) stock has declined 87.1% against a 9.5% fall of the industry and a 9.1% drop of the S&P 500.
The renowned oral care company has a market capitalization of $477.38 million. The company projects 25.6% growth for the next five years, ahead of the industry’s projected growth rate of 10.4% and the S&P 500’s estimated 10.8% growth.
Image Source: Zacks Investment Research
Factors At Play
Q1 Upsides: SmileDirectClub’s first-quarter revenues surpassed the Zacks Consensus Estimate. Revenues in the reported quarter increased 20% sequentially, driven primarily by 76,000 initial aligner shipments at an ASP of $18.90. The company liner shipment count was up more than 15% from fourth-quarter 2021 levels. A series of cutting-edge innovations, strategic distribution and insurance partnerships are added positives.
Throughout the quarter, the company saw improvements in both submissions per practice and increases in total practices in its network.
Innovations Aid Growth: SmileDirectClub is focused on developing products to differentiate its offerings in the oral care industry. In May 2022, the company announced the expansion of its best-in-class oral care product offerings with its new Wireless Premium Teeth Whitening Kit. In February 2022, it expanded its award-winning oral care product offerings with the new Stain Barrier that protects teeth with an invisible shield against common staining beverages, including coffee, tea, red wine and soda.
In January 2022, the company announced the expansion of its whitening product line with its new Fast-Dissolving Whitening Strips. In the same month, the company expanded its oral care product offerings with its new Pro Whitening System Plus, featuring a Wireless LED Whitening Light.
Strategic Alliances Add Growth: We are upbeat about SmileDirectClub’s slew of strategic collaborations. In terms of the retail partnership, the company’s oral care products are now available at over 12,500 retail stores nationwide, including Walmart, CVS, Walgreens, and Sam's Club. These partnerships are aimed at serving a highly efficient lead source and brand-building opportunity.
In February 2022, SmileDirectClub partnered with Carestream Dental to utilize their cutting-edge intraoral scanners throughout the company’s global SmileShop footprint and Partner Network locations. The company has also developed a dental partner network and currently has 735 global practices.
Downsides
Operating Loss in Q1: SmileDirectClub’s first-quarter marketing and selling expenses rose 0.4%. The company incurred an adjusted operating loss of $58.9 million in the quarter, wider than the year-ago operating loss of $26.7 million.
Leveraged Balance Sheet: SmileDirectClub’s total debt to capital of 138% at the end of the first quarter stood at an extremely high level. It represented a significant rise from 122.2% at the end of the fourth quarter.
Tough Competitive Landscape: SmileDirectClub competes with a handful of smaller companies that collectively have limited market share in the clear aligner industry, including Candid Co., Byte (Dentsply), and SnapCorrect. With the introduction of the company’s collaborative and wholesale partner network, it also faces competition from more well-established competitors in the traditional orthodontic industry.
Estimate Trend
Over the past 90 days, the Zacks Consensus Estimate for SmileDirectClub’s 2022 loss has moved north to 54 cents.
The Zacks Consensus Estimate for the company’s 2022 revenues is pegged at $622.2 million, suggesting a 2.4% fall from the 2021 figure.
Key Picks
A few better-ranked stocks in the broader medical space are Alkermes plc (ALKS - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Medpace Holdings, Inc. (MEDP - Free Report) .
Alkermes has an estimated long-term growth rate of 25.1%. Alkermes’ earnings surpassed estimates in the trailing four quarters, the average surprise being 350.5%. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alkermes has outperformed the industry over the past year. ALKS has gained 11.1% compared with the industry’s 44.7% decline in the said period.
AMN Healthcare has a long-term earnings growth rate of 1.1%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 15.6%, on average. It currently flaunts a Zacks Rank #2 (Buy).
AMN Healthcare has outperformed its industry in the past year. AMN has gained 5.1% against the industry’s 66.5% fall.
Medpace has a historical growth rate of 27.3%. Medpace’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.1%. It currently has a Zacks Rank #2.
Medpace has outperformed its industry in the past year. MEDP has declined 22.5% compared with the industry’s 66.5% fall.