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Global demand for outsourcing has not slowed. SYKES Enterprises Inc. (SYKE - Snapshot Report) recently surprised on the Zacks Consensus Estimate by 30% in the first quarter as financial services, healthcare and technology remained especially strong. This Zacks #1 Rank (strong buy) has attractive valuations with a price-to-sales ratio of only 0.8.

SYKES provides customer service solutions through phone, e-mail, web and chat, to large companies around the world. Customers are mainly in the communications, financial services, healthcare, technology and leisure industries.

Headquartered in Tampa, the company serves two geographic segments: the Americas (which includes the Asia Pacific region) and EMEA (Europe, Middle East and Africa.) For EMEA, the company also provides multi-lingual sales order processing, payment processing and inventory control.

SYKES Even Beat Its Own Guidance in Q1

On May 2, SYKES reported its first quarter results and surprised on the Zacks consensus by 8 cents per share. Earnings per share were 35 cents compared to the consensus of 27 cents.

This easily beat the company's own guidance range of 25 to 28 cents per share and blew by last year's results which were 21 cents per share.

Revenue rose 16.3% to $310.2 million from $266.6 million last year but that included the ICT acquisition which contributed $100.3 million in the quarter. Excluding the ICT acquisition, revenue rose 2.6%. It was boosted by growth in financial services and technology.

In the Americas, revenue rose 19.2% including ICT and 1.3% if you exclude it. The growth was mainly due to increased demand from existing clients in financial services and technology.

In the smaller segment, EMEA, revenue rose 6.6% to $63.6 million from $59.7 million last year. Excluding ICT and on a constant currency basis, EMEA revenue climbed 5.7% mainly due to growth from new and existing customers in financial services and transportation.

Lots of Cash On Hand

As of the end of last quarter, SYKES had no long term debt. The company also had cash and cash equivalents of $199.9 million. It also had $75 million of undrawn borrowing capacity under its revolving credit facility.

The company has used some of the extra cash to repurchase shares. By the end of March, it had repurchased 0.3 million shares at a cost of $5.5 million.

Raised Full Year Outlook

Given the strong first quarter performance, and expected continued strong demand, SYKES raised its full-year revenue and earnings per share forecast.

Revenue is now expected in the range of $1.225 billion to $1.24 billion from $1.215 billion to $1.23 billion.

Earnings per share are forecast between $1.43 and $1.53 up from the prior guidance of $1.30 to $1.40 per share.

Zacks Consensus Estimates Rise

Given the solid quarter and earnings guidance revision, the analysts have moved to raise estimates.

In the last month, 10 estimates were revised for 2011 which pushed the Zacks Consensus up to $1.49 from $1.35 per share. This is at the higher end of the company's guidance range.

That would also be earnings growth of 33%.

Analysts also expect double digit earnings growth to continue into 2012, with another 16.2% growth to $1.73 per share.

Shares Still Cheap Even After Rally

Shares are again pressuring the 52-week high.

But even after the recent rally, there is still plenty of value.

In addition to a price-to-sales ratio under 1.0, which usually means a company is undervalued, SYKES is also trading at just 14.3x forward estimates which is under my cut-off for "value" stocks of 15x.

The company also has a value price-to-book ratio of 1.7, which is under the value parameter of 3.0.

SYKES has rising estimates, share momentum and value, all rolled into one.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her at twitter.com/traceyryniec.

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