Why You Should Buy Evolution Gaming Group AB (publ) (STO:EVO) In This Bear Market

When stocks are plummeting in price, it's hard to start buying into all the uncertainty. But a disciplined long term investor knows there's no better time to buy than right now. And I'm not talking about buying into speculative, high-risk stocks. I'm talking about the well-proven, robust track record Evolution Gaming Group AB (publ). Why? Size. Financial health. Proven performance.

Check out our latest analysis for Evolution Gaming Group

Evolution Gaming Group AB (publ) develops, produces, markets, and licenses live casino solutions to sportsbook operators, online gaming operators, and land-based casinos in Europe and Canada. Established in 2006, and headed by CEO Martin Carlesund, the company now has 3.97k employees and with the market cap of kr21b, it falls under the mid-cap group. Size matters. The bigger the company is, the more well-resourced it is. The more money it produces from its operations which means it is less reliant on external funding. When times are bad in the market, being self-sufficient is extremely important as you can continue to operate at your own pace. Therefore, large cap companies are a great bet to invest in when you're heading to the bottom of the cycle.

With €6.9m debt on its books, Evolution Gaming Group has to pay interest periodically. This means it needs to have enough cash on hand to meet these upcoming expenses. With an interest coverage ratio of 658x, Evolution Gaming Group produces sufficient earnings (EBIT) to cover its interest payments. Anything above 3x is considered safe practice. Furthermore, its cash flows from operations copiously covers it debt by over 2x, much higher than the safe minimum of 0.2x. And, a given, its liquidity ratio holds up well with cash and other liquid assets exceeding upcoming liabilities, meaning EVO's financial strength will continue to let it thrive in a fickle market.

EVO’s profit growth over the previous five years has been positive, with an average annual rate of 45%, outperfoming the industry growth rate of 26%. It has also returned an ROE of 56% recently, above the industry return of 21%. Characteristics I value in a long term investment are proven in Evolution Gaming Group, and I can continue to sleep easy at night with the stock as part of my portfolio.

Next Steps:

Evolution Gaming Group makes for a robust long-term investment based on its scale, financial health and track record. Remember, in bear markets, sell-offs can be unjustified. Ask yourself, has anything really changed with Evolution Gaming Group? If not, then why not scoop it up at a discount? Lining your portfolio with a few well-established companies can reduce your risk and help you scale your wealth in the long run. One thing you should remember though, is to do your homework. Do your own research, come up with your point of view. Below is a list I've put together of other things you should consider before you buy:

1. Future Outlook: What are well-informed industry analysts predicting for EVO’s future growth? Take a look at our free research report of analyst consensus for EVO’s outlook.
2. Valuation: What is EVO worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether EVO is currently mispriced by the market.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.