Their focus is on analytics, data management, and risk management services. Genpact—which stands for “generating business impact”--began as a unit of GE in 1997, was spun-off in 2005 and listed on the NYSE in 2007.
Headquartered in New York City, the company now has more than 70, 000 employees worldwide and global operations in 25 countries. With more than 800 clients, including more than 25% of Fortune Global 500, Genpact is one of largest analytics providers in their industry.
Solid Third Quarter Results
The company reported its third quarter results on November 4. Total revenue for the quarter came in at $617.8 million, up 5% year over year and up 7% on a constant currency basis. Adjusted income from operations was $97.1 million, up 10% from the same quarter a year ago.
Adjusted earnings were $0.33 per share (per Zacks calculations), beating the Zacks Consensus Estimate of $0.28 per share. The company has delivered a beat in three out of last four quarters, with an average positive quarterly surprise of 8.4%.
During the quarter, they signed three new large deals, including one with Boeing, bringing the total for the year to seven.
The management now expects 2015 total revenue to be ~ $2.46 billion and adjusted income from operations margin to be in the range of 15.1% to 15.3%.
Returning Cash to Shareholders
During the quarter, Genpact repurchased 3.5 million of its common shares for a total of $78 million under its $250 million share repurchase program.
Industry Outlook Remains Strong
According to Genpact, Business Process Services industry is expected to continue to grow in low teens and reach ~$430 billion TAM (total addressable market) by 2019. The market has low penetration currently with no single market leader. They plan to capture high value opportunities through strategic investing in order to grow their market leadership.
Estimates Rising
As a result of continued solid performance, analysts have started raising the estimates for the company after results. Zacks Consensus Estimates for current quarter and year have increased to $0.30 per share and $1.12 per share, up from $0.29 per share and $1.09 per share, before the results. Rising earnings estimates sent the stock back to a Zacks Rank # 1 (Strong Buy).
The Bottom Line
In the current age of increasing regulatory oversight and all-time high shareholder activism, companies need to be nimble to transform and leverage new technology. This has created an excellent opportunity for Genpact to grow their market leadership using their more than 17 years of business domain expertise and experience running complex operations for more than 800 large companies.
Further, with a diversified client base of blue chip companies and favorable industry trends, the company seems to be well positioned to reward its investors. The stock was earlier featured as the “Bull of the day” on August 20, it is up almost 12% since then and we expect this uptrend to continue in the coming months
by Neena Mishra
Source: http://www.zacks.com/commentary/61942/bull-of-the-day-genpact-g
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