Stock Analysis

EVO Payments, Inc. (NASDAQ:EVOP) Could Be Less Than A Year Away From Profitability

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NasdaqGM:EVOP
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EVO Payments, Inc. (NASDAQ:EVOP) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. EVO Payments, Inc. operates as an integrated merchant acquirer and payment processor in the Americas and Europe. On 31 December 2020, the US$2.4b market-cap company posted a loss of US$8.2m for its most recent financial year. Many investors are wondering about the rate at which EVO Payments will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for EVO Payments

Consensus from 10 of the American IT analysts is that EVO Payments is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$18m in 2021. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 79% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NasdaqGM:EVOP Earnings Per Share Growth April 30th 2021

Underlying developments driving EVO Payments' growth isn’t the focus of this broad overview, however, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with EVO Payments is its debt-to-equity ratio of 171%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of EVO Payments which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at EVO Payments, take a look at EVO Payments' company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

  1. Valuation: What is EVO Payments worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether EVO Payments is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on EVO Payments’s board and the CEO’s background.
  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.

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What are the risks and opportunities for EVO Payments?

EVO Payments, Inc. operates as an integrated merchant acquirer and payment processor in the Americas and Europe.

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Rewards

  • Trading at 31.8% below our estimate of its fair value

  • Earnings are forecast to grow 59.97% per year

  • Became profitable this year

Risks

  • Has a high level of debt

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