With the business potentially at an important milestone, we thought we'd take a closer look at Paya Holdings Inc.'s (NASDAQ:PAYA) future prospects. Paya Holdings Inc., through its subsidiaries, provides integrated payment and commerce solutions that help customers accept and make payments, expedite receipt of money, and increase operating efficiency. The company’s loss has recently broadened since it announced a US$524k loss in the full financial year, compared to the latest trailing-twelve-month loss of US$7.1m, moving it further away from breakeven. As path to profitability is the topic on Paya Holdings' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Paya Holdings is bordering on breakeven, according to the 11 American IT analysts. They expect the company to post a final loss in 2021, before turning a profit of US$24m in 2022. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 77%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Paya Holdings' upcoming projects, though, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Paya Holdings is its debt-to-equity ratio of 103%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are key fundamentals of Paya Holdings which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Paya Holdings, take a look at Paya Holdings' company page on Simply Wall St. We've also compiled a list of important factors you should further examine:
- Valuation: What is Paya Holdings 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 Paya Holdings 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 Paya Holdings’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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
