Stock Analysis

Smartpay Holdings' (NZSE:SPY) Wonderful 462% Share Price Increase Shows How Capitalism Can Build Wealth

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NZSE:SPY
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Long term investing can be life changing when you buy and hold the truly great businesses. And we've seen some truly amazing gains over the years. Don't believe it? Then look at the Smartpay Holdings Limited (NZSE:SPY) share price. It's 462% higher than it was five years ago. And this is just one example of the epic gains achieved by some long term investors. On top of that, the share price is up 14% in about a quarter. But this could be related to the strong market, which is up 13% in the last three months.

Check out our latest analysis for Smartpay Holdings

Smartpay Holdings wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last 5 years Smartpay Holdings saw its revenue grow at 6.9% per year. That's a fairly respectable growth rate. Arguably it's more than reflected in the very strong share price gain of 41% a year over a half a decade. We usually like strong growth stocks but it does seem the market already appreciates this one quite well!

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

earnings-and-revenue-growth
NZSE:SPY Earnings and Revenue Growth December 26th 2020

If you are thinking of buying or selling Smartpay Holdings stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's good to see that Smartpay Holdings has rewarded shareholders with a total shareholder return of 30% in the last twelve months. However, the TSR over five years, coming in at 41% per year, is even more impressive. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Smartpay Holdings , and understanding them should be part of your investment process.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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

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