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Genpact (G) Down 6% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Genpact (G - Free Report) . Shares have lost about 6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Genpact due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Genpact Surpasses Q2 Earnings & Revenue Estimates
Genpactreported better-than-expected second quarter 2020 results, with earnings and revenues beating the Zacks Consensus Estimate.
Adjusted earnings per share of 52 cents outpaced the consensus mark by 48.6% and increased 6% year over year. This upside was driven by higher operating income of 4 cents, partially offset by negative impact of a penny each from higher interest expense.
Revenues amounted to $900 million, which beat the consensus estimate by 7.4% and improved 2% year over year on a reported and 3% on a constant-currency basis. The top line was aided by strength across global client and GE businesses.
Quarter Details
Global Clients (87% of total revenues) revenues climbed 3% year over year on a reported basis and 4% on a constant-currency basis to $783 million. This growth was driven by enhanced revenue coverage associated with transition to remote-working model and stronger client demand for transformation services. General Electric revenues of $117 million declined 2% year over year and contributed 13% to total revenues.
Adjusted income from operations totaled $145 million, up 7% year over year. Adjusted operating income margin of 16.2% improved 80 basis points (bps) year over year.
Genpact exited the quarter with cash and cash equivalents of $867.4 million compared with the $401.6 million recorded at the end of the previous quarter. Long-term debt (less current portion) totaled $1.3 billion, more or less flat with the prior quarter.
The company generated $192 million of cash from operating activities and capex was $16.3 million. Genpact returned $19 million to shareholders through dividend payout in the quarter.
2020 Guidance
Genpact expects revenues to be between $3.63 and $3.67 billion. Adjusted EPS is anticipated in the range of $2.03 to $2.07. The company expects global client revenue growth to be 5-6% year over year and adjusted operating income margin is anticipated to be around 15.5%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 16.11% due to these changes.
VGM Scores
At this time, Genpact has a strong Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Genpact has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Genpact (G) Down 6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Genpact (G - Free Report) . Shares have lost about 6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Genpact due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Genpact Surpasses Q2 Earnings & Revenue Estimates
Genpactreported better-than-expected second quarter 2020 results, with earnings and revenues beating the Zacks Consensus Estimate.
Adjusted earnings per share of 52 cents outpaced the consensus mark by 48.6% and increased 6% year over year. This upside was driven by higher operating income of 4 cents, partially offset by negative impact of a penny each from higher interest expense.
Revenues amounted to $900 million, which beat the consensus estimate by 7.4% and improved 2% year over year on a reported and 3% on a constant-currency basis. The top line was aided by strength across global client and GE businesses.
Quarter Details
Global Clients (87% of total revenues) revenues climbed 3% year over year on a reported basis and 4% on a constant-currency basis to $783 million. This growth was driven by enhanced revenue coverage associated with transition to remote-working model and stronger client demand for transformation services. General Electric revenues of $117 million declined 2% year over year and contributed 13% to total revenues.
Adjusted income from operations totaled $145 million, up 7% year over year. Adjusted operating income margin of 16.2% improved 80 basis points (bps) year over year.
Genpact exited the quarter with cash and cash equivalents of $867.4 million compared with the $401.6 million recorded at the end of the previous quarter. Long-term debt (less current portion) totaled $1.3 billion, more or less flat with the prior quarter.
The company generated $192 million of cash from operating activities and capex was $16.3 million. Genpact returned $19 million to shareholders through dividend payout in the quarter.
2020 Guidance
Genpact expects revenues to be between $3.63 and $3.67 billion. Adjusted EPS is anticipated in the range of $2.03 to $2.07. The company expects global client revenue growth to be 5-6% year over year and adjusted operating income margin is anticipated to be around 15.5%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 16.11% due to these changes.
VGM Scores
At this time, Genpact has a strong Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Genpact has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.