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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

3 Reasons EVH is Risky and 1 Stock to Buy Instead

EVH Cover Image

Over the past six months, Evolent Health’s stock price fell to $8.92. Shareholders have lost 5.6% of their capital, which is disappointing considering the S&P 500 has climbed by 15.7%. This was partly due to its softer quarterly results and might have investors contemplating their next move.

Is now the time to buy Evolent Health, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.

Why Is Evolent Health Not Exciting?

Even with the cheaper entry price, we're swiping left on Evolent Health for now. Here are three reasons why EVH doesn't excite us and a stock we'd rather own.

1. Revenue Projections Show Stormy Skies Ahead

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Evolent Health’s revenue to drop by 4%, a decrease from its 19.6% annualized growth for the past five years. This projection doesn't excite us and implies its products and services will see some demand headwinds.

2. Breakeven Free Cash Flow Limits Reinvestment Potential

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Evolent Health broke even from a free cash flow perspective over the last five years, giving the company limited opportunities to return capital to shareholders.

Evolent Health Trailing 12-Month Free Cash Flow Margin

3. Previous Growth Initiatives Have Lost Money

Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Evolent Health’s five-year average ROIC was negative 3.2%, meaning management lost money while trying to expand the business. Its returns were among the worst in the healthcare sector.

Evolent Health Trailing 12-Month Return On Invested Capital

Final Judgment

Evolent Health isn’t a terrible business, but it doesn’t pass our quality test. Following the recent decline, the stock trades at 20.4× forward P/E (or $8.92 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're fairly confident there are better stocks to buy right now. Let us point you toward one of Charlie Munger’s all-time favorite businesses.

Stocks We Like More Than Evolent Health

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.

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