Waldencast Acquisition (WALD) AI Stock Analysis

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Waldencast Acquisition

(NASDAQ:WALD)

54Neutral

Waldencast Acquisition has demonstrated commendable revenue growth and solid brand performance, particularly highlighted in the recent earnings call. However, significant challenges remain, including persistent profitability issues, negative cash flow, and valuation concerns. The technical indicators suggest bearish momentum, further impacting the overall stock attractiveness.

Positive Factors

Brand Growth

Both the Obagi and Milk Makeup brands saw strong growth and were up +30.0% and +31.9% YOY respectively in the quarter.

Distribution Expansion

Milk Makeup recently expanded into 600+ Ulta doors in the US, highlighting growth potential in select department store channels and more Ulta locations.

Sales Performance

Waldencast reported 4Q sales up +30.8% beating the Street at +27.6%.

Negative Factors

Market Challenges

1H25 could be more challenging in the beauty category and for WALD given the strong performance from last year.

Profitability Pressures

Near-term expenses continue to pressure overall profitability and cash flow generation.

Stock Pressure

WALD's stock has been pressured recently due to prior issues around their distributor in Southeast Asia.

Waldencast Acquisition (WALD) vs. S&P 500 (SPY)

Market Cap

$299.44M

Dividend YieldN/A

Average Volume (3M)59.19K

Price to Earnings (P/E)―

Beta (1Y)0.53

Revenue Growth25.55%

EPS Growth61.22%

CountryUS

Employees335

SectorTechnology

Sector Strength44

IndustrySoftware - Application

Share Statistics

EPS (TTM)-0.18

Shares Outstanding112,054,380

10 Day Avg. Volume52,980

30 Day Avg. Volume59,189

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)1.74

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$5.38

Price Target Upside95.64% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering5

Waldencast Acquisition Business Overview & Revenue Model

Company DescriptionWaldencast Acquisition Corp. a skin care company, provides advanced skin care treatments. Its products are designed to help minimize the appearance of premature skin aging, skin damage, hyperpigmentation, acne, and sun damage primarily available through dermatologists, plastic surgeons, medical spas, and other skin care professionals. Its portfolio includes Obagi Medical that provides transformational skin care products formulated to minimize signs of skin aging, address dark spots, hyperpigmentation, fine lines, and wrinkles and to protect and enhance skin tone and texture; and Obagi Clinical that offers skin care products designed to prevent the early signs of skin aging. The company was founded in 1988 and is based in White Plains, New York.

How the Company Makes MoneyWaldencast Acquisition Corp. generates revenue primarily through the acquisition and subsequent growth of companies within the beauty and wellness sectors. The company initially raises capital through its initial public offering (IPO) as a SPAC. Once it identifies and merges with a target company, Waldencast aims to enhance the operational efficiencies and market reach of the acquired company, thus increasing its value. The revenue model is centered on the appreciation of the acquired company's value, which can lead to profits through increased stock prices, dividends, or eventual sale. Additionally, Waldencast may benefit from management fees or advisory roles in its acquired companies. Significant partnerships or investments in high-potential brands also contribute to its earnings.

Waldencast Acquisition Financial Statement Overview

Summary

Waldencast Acquisition shows promising revenue growth and a strong gross profit margin, yet struggles with profitability and cash generation. The balance sheet is strong with a favorable equity position and moderate leverage, but overall performance is hindered by negative operating cash flow and net losses. Continued focus on reducing operational losses and improving cash flow is essential for financial health.

Income Statement

Neutral

Waldencast Acquisition has demonstrated revenue growth from 2023 to 2024, with a notable increase of 25.5% in total revenue. However, the company is still not profitable, as indicated by negative net income and EBIT margins. The gross profit margin shows strength at 70% for 2024, suggesting efficient production processes, but the negative EBIT margin of -21.4% highlights ongoing operational challenges.

Balance Sheet

Positive

The balance sheet reflects a solid equity base with an equity ratio of 67.9%, indicating financial stability. The debt-to-equity ratio remains manageable at 0.27, suggesting the company is not overly reliant on debt financing. However, the return on equity is negative due to persistent losses, indicating inefficiencies in generating returns from shareholders' equity.

Cash Flow

Neutral

Cash flow analysis reveals negative free cash flow, although there is an improvement from 2023 to 2024. The operating cash flow remains negative, indicating challenges in generating cash from core operations. The free cash flow to net income ratio is not meaningful due to negative values, highlighting cash constraints.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
240.40M	273.87M	218.14M	166.13M	142.47M	94.43M
	Gross Profit
167.60M	191.74M	141.58M	39.44M	87.44M	65.33M
	EBIT
47.50M	-58.58M	-81.93M	-74.27M	-1.63M	528.00K
	EBITDA
97.37M	28.63M	-33.54M	-99.25M	15.05M	13.94M
	Net Income Common Stockholders
-91.11M	-42.44M	-89.98M	-116.62M	-19.58M	-2.37M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
335.06K	14.80M	22.58M	8.69M	12.79M	0.00
	Total Assets
345.70M	975.86M	1.04B	1.09B	184.59M	166.79K
	Total Debt
0.00	182.11M	177.72M	199.25M	118.86M	0.00
	Net Debt
-335.06K	167.30M	155.15M	190.55M	106.07M	0.00
	Total Liabilities
36.06M	245.92M	273.44M	290.18M	145.35M	177.74K
	Stockholders Equity
309.64M	662.32M	624.63M	639.24M	39.24M	-10.95K
Cash Flow		Free Cash Flow
-12.67M	-11.83M	-31.82M	-87.51M	2.24M	-9.14M
	Operating Cash Flow
-11.38M	-8.82M	-29.77M	-85.01M	3.53M	-7.43M
	Investing Cash Flow
-1.40M	-2.92M	-1.99M	-545.28M	-3.79M	-1.71M
	Financing Cash Flow
11.31M	5.58M	44.33M	633.35M	5.16M	14.32M

Waldencast Acquisition Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price2.75

Price Trends

50DMA

3.01

Negative

100DMA

3.23

Negative

200DMA

3.32

Negative

Market Momentum

MACD

-0.12

Negative

RSI

54.44

Neutral

STOCH

78.13

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WALD, the sentiment is Neutral. The current price of 2.75 is above the 20-day moving average (MA) of 2.73, below the 50-day MA of 3.01, and below the 200-day MA of 3.32, indicating a neutral trend. The MACD of -0.12 indicates Negative momentum. The RSI at 54.44 is Neutral, neither overbought nor oversold. The STOCH value of 78.13 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WALD.

Waldencast Acquisition Risk Analysis

Waldencast Acquisition disclosed 100 risk factors in its most recent earnings report. Waldencast Acquisition reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Waldencast Acquisition Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GILT	71 Outperform	$354.65M	14.27	8.58%	―	14.79%	5.04%
SNDL	60 Neutral	$357.65M	―	-8.00%	―	-2.89%	47.06%
XPER	60 Neutral	$305.88M	―	-3.36%	―	-5.30%	90.66%
NNDM	59 Neutral	$317.89M	―	-9.36%	―	―	―
Sector *	58 Neutral	$9.99B	10.12	-6.46%	3.10%	7.47%	-11.60%
WALD	54 Neutral	$299.44M	―	-6.60%	―	25.55%	61.22%
AEVA	53 Neutral	$344.42M	―	-92.90%	―	110.23%	12.96%

* Technology Sector Average

Performance Comparison

WALD

Waldencast Acquisition

2.93

-2.43

-45.34%

GILT

Gilat

6.22

0.86

16.04%

NNDM

Nano Dimension

1.45

-1.01

-41.06%

SNDL

1.39

-0.68

-32.85%

AEVA

Aeva Technologies

6.18

3.09

100.00%

XPER

Xperi Inc

6.72

-2.84

-29.71%

Waldencast Acquisition Earnings Call Summary

Earnings Call Date: Mar 18, 2025 | % Change Since: -16.67% | Next Earnings Date: May 13, 2025

Earnings Call Sentiment Positive

The earnings call reflects a positive sentiment overall, with significant revenue growth, improved profitability, and successful brand performance. The company is strategically expanding its distribution and launching innovative products. However, some challenges include retail inventory adjustments and costs related to a regulatory investigation.

Highlights

Strong Revenue Growth

Net revenue reached $72.1 million in Q4, representing a robust 29.4% increase in comparable growth, with balanced performance across brands. Milk Makeup grew 31.9%, and Obagi Medical delivered 27.7% comparable net revenue growth.

Improved Profitability

Adjusted EBITDA doubled to $11.2 million in Q4, with adjusted EBITDA margin expansion of 530 basis points year-over-year, reaching 15.5%.

Successful Brand Performance

Milk Makeup's net revenue increased 31.9% in Q4, driven by channel expansion, including Ulta Beauty. Obagi Medical grew 27.7% in Q4, driven by strong U.S. physician dispense and e-commerce channels.

Strategic Expansion and Innovation

Milk Makeup expanded into 600 Ulta doors and online in the U.S., and launched new products like the Hydro Grip Skin Tint and Jelly Skincare. Obagi Medical expanded its Suzan Obagi MD collection with new products.

Lowlights

Retail Inventory Adjustments

Retail inventory adjustments led to a softer first quarter outlook, with expected flat net revenue growth due to a diversity of a successful launch from the prior year and some retailer adjustments.

Exposure to Regulatory Investigation Costs

Significant portion of cash is being used to cover non-recurring expenses associated with an ongoing regulatory investigation, impacting cash generation and financial position.

Company Guidance

During the call, Waldencast provided guidance for fiscal year 2025, anticipating net revenue growth in the mid-teens and an adjusted EBITDA margin expansion into the mid to high teens. The company reported strong fiscal year 2024 results, with net revenue of $273.9 million, marking a 27.5% increase in comparable growth. Milk Makeup grew 24% year-over-year, while Obagi Medical saw a 30.7% increase, highlighting the robust performance of both brands. Adjusted gross profit increased by 35.3% to $203.6 million, and the adjusted EBITDA margin expanded by 350 basis points to 14.7%. Waldencast emphasized its strategic focus on innovation, distribution expansion, and increased marketing investments to sustain and accelerate its growth trajectory.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.