Stock Analysis

Should Splitit Payments (ASX:SPT) Be Disappointed With Their 90% Profit?

ASX:SPT
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These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Splitit Payments Ltd (ASX:SPT) share price is up 90% in the last year, clearly besting the market return of around 2.6% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! We'll need to follow Splitit Payments for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

View our latest analysis for Splitit Payments

Because Splitit Payments made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Splitit Payments grew its revenue by 158% last year. That's well above most other pre-profit companies. While the share price gain of 90% over twelve months is pretty tasty, you might argue it doesn't fully reflect the strong revenue growth. If that's the case, now might be the time to take a close look at Splitit Payments. Since we evolved from monkeys, we think in linear terms by nature. So if growth goes exponential, opportunity may exist for the enlightened.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
ASX:SPT Earnings and Revenue Growth December 30th 2020

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. So it makes a lot of sense to check out what analysts think Splitit Payments will earn in the future (free profit forecasts).

A Different Perspective

Splitit Payments shareholders should be happy with the total gain of 90% over the last twelve months. We regret to report that the share price is down 8.1% over ninety days. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 5 warning signs for Splitit Payments (1 is concerning) that you should be aware of.

Splitit Payments is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.

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This article by Simply Wall St is general in nature. 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.
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