EVO Payments, Inc.'s (NASDAQ:EVOP): EVO Payments, Inc. operates as an integrated merchant acquirer and payment processor in the Americas and Europe. On 31 December 2019, the US$1.6b market-cap posted a loss of -US$10.1m for its most recent financial year. Many investors are wondering the rate at which EVOP will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for EVOP’s growth and when analysts expect the company to become profitable.
Consensus from the 8 IT analysts is EVOP 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. Therefore, EVOP is expected to breakeven roughly a few months from now. In order to meet this breakeven date, I calculated the rate at which EVOP must grow year-on-year. It turns out an average annual growth rate of 72% is expected, which is rather optimistic! If this rate turns out to be too aggressive, EVOP may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of EVOP’s upcoming projects, but, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing I would like to bring into light with EVOP is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and EVOP has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are key fundamentals of EVOP which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at EVOP, take a look at EVOP’s company page on Simply Wall St. I’ve also compiled a list of pertinent aspects you should further research:
- Valuation: What is EVOP 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 EVOP 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 back ground.
- 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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