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Genpact (G) Stock Up 9.1% Since Q3 '20 Earnings Release

Zacks Equity Research
·4 min read

Shares of Genpact Limited G have gained 9.1% since it reported third-quarter 2020 results on Nov 2, outperforming the 2.6% growth of the industry it belongs to.

The outperformance can be attributed to the company’s better-than-expected results and impressive 2020 guidance.

Quarterly adjusted earnings per share of 56 cents outpaced the consensus mark by 12% and were flat year over year. The positive impact of 7 cents from higher operating income was offset by a negative impact of 4 cents from foreign-exchange re-measurement, 2 cents from higher tax and a penny from net interest expenses.

Revenues amounted to $936 million, which beat the consensus estimate by 3.4% and improved 5% year over year on a reported as well as constant-currency basis. The top line was aided by strength in Global Clients business.

Genpact raised its 2020 guidance.The company now expects revenues to be between $3.68 and $3.695 billion, compared with the prior guidance of $3.63 and $3.67 billion. The midpoint ($3.69 billion) of the raised guided range is higher than the Zacks Consensus Estimate of $3.68 billion. Adjusted EPS is now anticipated in the range of $2.08 to 2.11 compared with $2.03 to $2.07 anticipated earlier. The midpoint of this raised guided range is same as the Zacks Consensus Estimate of $2.1.

Quarter Details

Global Clients (88% of total revenues) revenues climbed 7% year over year on a reported as well as constant-currency basis to $824 million. This growth was driven by strong growth in Transformation Services due to healthy demand for shorter cycle Transformation Services solutions in areas of financial planning and analysis, and supply chain. General Electric revenues of $111 million declined 8% year over year and contributed 12% to total revenues. The decline was mainly due to lesser IT spending.

Adjusted income from operations totaled $160 million, up 12% year over year. Adjusted operating income margin of 17.1% improved 110 basis points (bps) year over year.

Genpact exited the quarter with cash and cash equivalents of $803.4 million compared with $867.4 million recorded at the end of the previous quarter. Long-term debt (less current portion) totaled $1.3 billion, flat with the prior quarter.

The company generated $252 million of cash from operating activities and capex was $14.8 million. Genpact returned $29 million to shareholders through share repurchases and $19 million through dividends in the quarter.

Raised 2020 Guidance

The company currently expects Global Clients revenue growth to be 6-6.5% compared with 5-6% projected earlier. Year-over-year and adjusted operating income margin is anticipated to be around 15.7% compared with the prior anticipation of 15.5%.

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

Performance of Some Business Services Companies

Equifax Inc. EFX reported third-quarter 2020 adjusted earnings of $1.87 per share that beat the Zacks Consensus Estimate by 16.2% and improved 26.4% on a year-over-year basis. Revenues of $1.07 billion outpaced the consensus estimate by 5.9% and improved 22% year over year.

ManpowerGroup Inc. MAN reported third-quarter 2020 earnings of $1.12 per share, beating the consensus mark by 90.5% but declining more than 37.5% year over year. Revenues of $4.58 billion surpassed the consensus mark by 8.7% but declined 12.7% year over year.

IHS Markit Ltd. INFO recorded third-quarter fiscal 2020 adjusted earnings per share of 77 cents that surpassed the consensus estimate by 11.6% and increased 15% on a year-over-year basis. Total revenues came in at $1.07 billion, marginally surpassing the consensus mark but declining 4% from the year-ago quarter.

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