Recent 13% pullback isn't enough to hurt long-term FlexShopper (NASDAQ:FPAY) shareholders, they're still up 232% over 3 years

By
Simply Wall St
Published
November 16, 2021
NasdaqCM:FPAY
Source: Shutterstock

FlexShopper, Inc. (NASDAQ:FPAY) shareholders might be concerned after seeing the share price drop 14% in the last month. But that doesn't change the fact that the returns over the last three years have been very strong. In three years the stock price has launched 232% higher: a great result. After a run like that some may not be surprised to see prices moderate. The fundamental business performance will ultimately dictate whether the top is in, or if this is a stellar buying opportunity.

While the stock has fallen 13% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

See our latest analysis for FlexShopper

Given that FlexShopper didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. 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.

Over the last three years FlexShopper has grown its revenue at 22% annually. That's much better than most loss-making companies. Meanwhile, the share price performance has been pretty solid at 49% compound over three years. But it does seem like the market is paying attention to strong revenue growth. That's not to say we think the share price is too high. In fact, it might be worth keeping an eye on this one.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
NasdaqCM:FPAY Earnings and Revenue Growth November 17th 2021

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. You can see what analysts are predicting for FlexShopper in this interactive graph of future profit estimates.

A Different Perspective

It's good to see that FlexShopper has rewarded shareholders with a total shareholder return of 48% in the last twelve months. That certainly beats the loss of about 11% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand FlexShopper better, we need to consider many other factors. Even so, be aware that FlexShopper is showing 3 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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

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