Despite a R155m drawdown last week, AYO Technology Solutions (JSE:AYO) shareholders are still up 6.3% over 3 years

While it’s not a mind-blowing move, it’s good to see the AYO Limited Technology Solutions (JSE:AYO) the share price has risen 17% in the last three months. But that can’t overshadow the less-than-impressive returns of the past three years. After all, the stock price is down 42% in the last three years, significantly underperforming the market.

Judging from last week, investor sentiment for AYO Technology Solutions is not positive, so let’s see if there is a discrepancy between the fundamentals and the stock price.

Before we look at performance, you’d like to know that our analysis indicates that AYO is potentially underrated!

AYO Technology Solutions is currently unprofitable, so most analysts would look to revenue growth to get an idea of ​​how fast the underlying business is growing. Shareholders of unprofitable companies typically expect strong earnings growth. This is because it is difficult to be sure that a business will be sustainable if revenue growth is negligible and it never makes a profit.

Over the past three years, AYO Technology Solutions saw revenue grow 2.8% annually, compounded. Since you’re losing money in the pursuit of growth, we’re not really impressed with that. In fact, the stock has fallen 12% in the last three years. Shareholders will likely expect growth to pick up soon. But the real upside for shareholders will be if the company can start turning a profit.

The chart below shows how earnings and revenue have changed over time (find out the exact values ​​by clicking on the image).

earnings-and-revenue-growth
JSE: AYO Earnings & Revenue Growth Sep 17, 2022

East free AYO Technology Solutions’ Interactive Balance Sheet Strength Report is a good place to start if you want to dig deeper into the stock.

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What about the dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. While the share price return only reflects the change in share price, the TSR includes the value of dividends (assuming they are reinvested) and the benefit of any discounted capital increase or spin-off. TSR arguably gives a more complete picture of the return generated by a stock. In the case of AYO Technology Solutions, it has a TSR of 6.3% in the last 3 years. That beats the stock price performance we mentioned earlier. This is largely the result of their dividend payments!

a different perspective

We are pleased to report that AYO Technology Solutions rewarded shareholders with a total shareholder return of 24% over the past year. That includes the value of the dividend. That profit actually exceeds the 2.1% TSR it generated (per year) for three years. Improved shareholder returns suggest the stock is becoming more popular over time. It is always interesting to track the performance of the stock price over the long term. But to better understand AYO’s technology solutions, we need to consider many other factors. For example, we have identified 3 warning signs for AYO Technology Solutions (2 are a bit nasty) that you should be aware of.

of course AYO Technology Solutions may not be the best stock to buy. So you might want to see this free growth stock collection.

Please note that the market returns quoted in this article reflect the weighted average market returns of the stocks currently listed on the ZA exchanges.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock, and it does not take into account your goals or financial situation. Our goal is to provide you with long-term focused analysis driven by fundamental data. Please note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

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Find out if AYO Technology Solutions is potentially overvalued or undervalued by consulting our comprehensive analysis, including fair value estimates, risks and caveats, dividends, internal transactions and financial health.

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