Stock Analysis

Should You Investigate EVO Payments, Inc. (NASDAQ:EVOP) At US$27.43?

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NasdaqGM:EVOP
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EVO Payments, Inc. (NASDAQ:EVOP), is not the largest company out there, but it received a lot of attention from a substantial price increase on the NASDAQGM over the last few months. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine EVO Payments’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for EVO Payments

What is EVO Payments worth?

According to my valuation model, EVO Payments seems to be fairly priced at around 17.83% above my intrinsic value, which means if you buy EVO Payments today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $23.28, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since EVO Payments’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from EVO Payments?

earnings-and-revenue-growth
NasdaqGM:EVOP Earnings and Revenue Growth December 18th 2020

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. EVO Payments' revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? EVOP’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on EVOP, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. You'd be interested to know, that we found 1 warning sign for EVO Payments and you'll want to know about it.

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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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