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If You Had Bought Smartpay Holdings (NZSE:SPY) Shares Five Years Ago You'd Have Earned 371% Returns

Simply Wall St
·3-min read

Buying shares in the best businesses can build meaningful wealth for you and your family. While not every stock performs well, when investors win, they can win big. Just think about the savvy investors who held Smartpay Holdings Limited (NZSE:SPY) shares for the last five years, while they gained 371%. If that doesn't get you thinking about long term investing, we don't know what will. We note the stock price is up 3.1% in the last seven days.

Check out our latest analysis for Smartpay Holdings

Smartpay Holdings isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

For the last half decade, Smartpay Holdings can boast revenue growth at a rate of 3.7% per year. That's not a very high growth rate considering the bottom line. So shareholders should be pretty elated with the 36% increase per year, in that time. We don't think the growth over the period is that great, but it could be that faster growth appears to some to be on the horizon. Having said that, a closer look at the numbers might surface good reasons to believe that profits will gush in the future.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
earnings-and-revenue-growth

If you are thinking of buying or selling Smartpay Holdings stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's good to see that Smartpay Holdings has rewarded shareholders with a total shareholder return of 169% in the last twelve months. That gain is better than the annual TSR over five years, which is 36%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Smartpay Holdings (of which 1 doesn't sit too well with us!) you should know about.

Of course Smartpay Holdings may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on NZ exchanges.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.