MAV Beauty Brands (TSX:MAV) is a Vaughan, Ontario-based company that operates in the personal care space. Shares of this TSX stock have plunged 68% in 2021 as of close on November 9. Its shares took a major hit over the past week, dropping 32%.
Investors should be eager to seek exposure to this promising industry. Earlier this year, ResearchAndMarkets projected that the Global Beauty and Personal Care market would reach $558 billion by 2026. That would represent a CAGR of 4.8% from 2020 through to the end of the forecast period.
The company unveiled its third quarter 2021 results on November 8. Total revenue was reported at $24.7 million in Q3 2021 – up from $31.7 million in the previous year. Meanwhile, adjusted EBITDA was more than halved at $3.1 million. It saw its free cash flow sink to $1.8 million compared to $4.4 million in the third quarter of 2020.
MAV Beauty management made its disappointment clear during the earnings call. It pointed out the negative impact of the non-cash goodwill impairment. Moreover, net sales suffered a retreat as MAV Beauty was hurt by the impact of net distribution losses from retailer planogram resets. The company was also hit by customer inventory adjustments.
It remains to be seen whether the company can rebound in the quarters ahead. MAV Beauty stock possesses a very favourable price-to-earnings ratio of 5.7. The stock has an RSI of 23, putting it well in technically oversold territory. MAV Beauty stock certainly looks undervalued, but management will need to bring its results in line in order for the risk to be worth it.
