Torrid has gotten torched over the last six months - since August 2025, its stock price has dropped 45.8% to $1.16 per share. This was partly driven by its softer quarterly results and might have investors contemplating their next move.
Is there a buying opportunity in Torrid, or does it present a risk to your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Do We Think Torrid Will Underperform?
Even though the stock has become cheaper, we're cautious about Torrid. Here are three reasons there are better opportunities than CURV and a stock we'd rather own.
1. Shrinking Same-Store Sales Indicate Waning Demand
Same-store sales is an industry measure of whether revenue is growing at existing stores, and it is driven by customer visits (often called traffic) and the average spending per customer (ticket).
Torrid’s demand has been shrinking over the last two years as its same-store sales have averaged 5.6% annual declines.
2. EPS Trending Down
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Sadly for Torrid, its EPS declined by 26.3% annually over the last three years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.
3. High Debt Levels Increase Risk
Debt is a tool that can boost company returns but presents risks if used irresponsibly. As long-term investors, we aim to avoid companies taking excessive advantage of this instrument because it could lead to insolvency.
Torrid’s $416.4 million of debt exceeds the $17.61 million of cash on its balance sheet. Furthermore, its 5× net-debt-to-EBITDA ratio (based on its EBITDA of $75.15 million over the last 12 months) shows the company is overleveraged.
At this level of debt, incremental borrowing becomes increasingly expensive and credit agencies could downgrade the company’s rating if profitability falls. Torrid could also be backed into a corner if the market turns unexpectedly – a situation we seek to avoid as investors in high-quality companies.
We hope Torrid can improve its balance sheet and remain cautious until it increases its profitability or pays down its debt.
Final Judgment
Torrid doesn’t pass our quality test. After the recent drawdown, the stock trades at 7.8× forward EV-to-EBITDA (or $1.16 per share). This multiple tells us a lot of good news is priced in - we think there are better stocks to buy right now. Let us point you toward the most dominant software business in the world.
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