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Genpact (G) Beats on Q1 Earnings, Stock Down 7.1% on Weak View

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Genpact Limited G reported better-than-expected first-quarter 2021 results.

The stock plunged 7.1% since the earnings release on May 10, as the company‘s earnings guidance for 2021 was weak. For the full year, adjusted earnings per share are (EPS) currently anticipated in the range of $2.27-2.30 per share (previous guidance: $2.26-2.29 per share). The midpoint of this raised guidance ($2.28) is below the Zacks Consensus Estimate of $2.29. Revenues for 2021 are anticipated to be between $3.93 and $3.99 billion. The midpoint ($3.96 billion) of the range is also below the current Zacks Consensus Estimate of $3.97 billion.

Quarterly adjusted EPS of 59 cents outpaced the Zacks Consensus Estimate by 20.4% and inched up 11.3% year over year. Revenues amounted to $946.1 million, which beat the consensus estimate by 2.3% and increased 2.5% year over year on a reported as well as on a constant-currency (cc) basis. The top line was aided by strength in Global Clients business.

Notably, Genpact’s shares have gained 32.3% in the past year compared with the 49.2% rally of the industry it belongs to.

Quarter Details

Global Clients (90% of total revenues) revenues climbed 6% year over year on a reported and 5% at cc to $853 million. The upside was driven by strong growth in Transformation Services.

General Electric revenues of $93 million declined 24% year over year and contributed 10% to total revenues. The downside was mainly due to productivity commitments and macroeconomic impact.

Adjusted income from operations totaled $163 million, up 20% year over year. Adjusted operating income margin of 17.2% moved up 250 basis points (bps) year over year.

Genpact exited the quarter with cash and cash equivalents of $644 million compared with $680 million recorded at the end of the previous quarter. Long-term debt totaled $1.6 billion compared with $1.3 billion recorded in the prior quarter.

The company generated $77.2 million of cash from operating activities and capex was $12 million. Genpact returned $89.8 million to shareholders through share repurchases and $20 million through dividends in the quarter.

Genpact Limited Price, Consensus and EPS Surprise

Genpact Limited Price, Consensus and EPS Surprise
Genpact Limited Price, Consensus and EPS Surprise

Genpact Limited price-consensus-eps-surprise-chart | Genpact Limited Quote

Revised 2021 Guidance

The company currently expects Global Clients revenue growth to be 9-11% (previous guidance: 8-10%) and at cc it is expected to grow 8-10% (previous guidance: 7-9%).

Adjusted income from operations margin is still expected to be approximately at 16%.

Genpact currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

Equifax’s EFX first-quarter 2021 adjusted earnings of $1.97 per share beat the Zacks Consensus Estimate by 29.6% and increased on a year-over-year basis. Revenues of $1.21 billion outpaced the consensus mark by 7.9% and rose 26.6% year over year on a reported basis as well as on a local-currency basis.

Robert Half’s RHI first-quarter 2021 earnings of 98 cents per share beat the consensus mark by 22.5% and were up 24.1% year over year. Revenues of $1.4 billion surpassed the consensus mark by 3.3%, but declined 7.2% year over year on a reported basis and 7.6% on an adjusted basis.

Omnicom’s OMC first-quarter 2021 adjusted earnings of $1.33 per share beat the consensus mark by 16.7% and increased 11.8% year over year. Total revenues of $3.4 billion surpassed the consensus estimate by 3.6% and increased marginally year over year.

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Equifax, Inc. (EFX) : Free Stock Analysis Report

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Robert Half International Inc. (RHI) : Free Stock Analysis Report

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