With the business potentially at an important milestone, we thought we'd take a closer look at EVO Payments, Inc.'s (NASDAQ:EVOP) future prospects. EVO Payments, Inc. operates as an integrated merchant acquirer and payment processor in the Americas and Europe. With the latest financial year loss of US$8.2m and a trailing-twelve-month loss of US$6.6m, the US$2.4b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is EVO Payments' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
EVO Payments is bordering on breakeven, according to the 11 American IT analysts. They expect the company to post a final loss in 2020, before turning a profit of US$20m in 2021. So, the company is predicted to breakeven approximately 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 64% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for EVO Payments given that this is a high-level summary, though, take into account that typically 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 183%. Generally, the rule of thumb is 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.
There are too many aspects of EVO Payments to cover in one brief article, but the key fundamentals for the company can all be found in one place – EVO Payments' company page on Simply Wall St. We've also put together a list of key aspects you should further examine:
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.
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.
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.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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