Stock Analysis

If You Had Bought EVO Payments' (NASDAQ:EVOP) Shares A Year Ago You Would Be Down 15%

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NasdaqGM:EVOP
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Investors can approximate the average market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the EVO Payments, Inc. (NASDAQ:EVOP) share price is down 15% in the last year. That's well below the market return of 26%. EVO Payments may have better days ahead, of course; we've only looked at a one year period. More recently, the share price has dropped a further 9.4% in a month.

Check out our latest analysis for EVO Payments

Because EVO Payments made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

EVO Payments' revenue didn't grow at all in the last year. In fact, it fell 11%. That looks pretty grim, at a glance. The stock price has languished lately, falling 15% in a year. What would you expect when revenue is falling, and it doesn't make a profit? It's hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.

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
NasdaqGM:EVOP Earnings and Revenue Growth February 3rd 2021

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for EVO Payments in this interactive graph of future profit estimates.

A Different Perspective

Given that the market gained 26% in the last year, EVO Payments shareholders might be miffed that they lost 15%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. Putting aside the last twelve months, it's good to see the share price has rebounded by 6.5%, in the last ninety days. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 1 warning sign for EVO Payments that you should be aware of.

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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