EVO Payments, Inc. (NASDAQ:EVOP) Has Found A Path To Profitability

By
Simply Wall St
Published
January 15, 2022
NasdaqGM:EVOP
Source: Shutterstock

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. The US$2.0b market-cap company’s loss lessened since it announced a US$8.2m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$3.9m, as it approaches breakeven. 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?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for EVO Payments

Consensus from 9 of the American IT analysts is that EVO Payments is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$24m in 2022. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 99% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
NasdaqGM:EVOP Earnings Per Share Growth January 15th 2022

We're not going to go through company-specific developments for EVO Payments given that this is a high-level summary, but, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. EVO Payments currently has a debt-to-equity ratio of 166%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on EVO Payments, so if you are interested in understanding the company at a deeper level, take a look at EVO Payments' company page on Simply Wall St. We've also put together a list of relevant factors you should further research:

  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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