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Genpact (G) Beats on Q2 Earnings, Stock Up 2.2% on Strong View

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Genpact Limited (G - Free Report) reported better-than-expected second-quarter 2021 results.

The stock climbed 2.2% since the earnings release on Aug 5, as the company’s guidance for 2021 was impressive. Adjusted EPS is currently anticipated in the range of $2.36-$2.39 per share compared with the previous guidance of $2.27-2.30 per share. The raised guidance range is above the Zacks Consensus Estimate of $2.33. Revenues are anticipated between $3.96 to $4 billion compared with the prior guidance of $3.93 to $3.99 billion. The midpoint ($3.98 billion) of the range is same as the Zacks Consensus Estimate.

Quarterly adjusted EPS of 66 cents outpaced the Zacks Consensus Estimate by 22.2% and inched up 27% year over year. Revenues amounted to $988.1 million, which beat the consensus estimate by 2.4% and increased 10% year over year on a reported basis and 7% on a constant-currency (cc) basis.

Genpact’s shares have gained 21.5% in the past year, underperforming the 45.9% rally of the industry it belongs to.

Quarter Details

Global Clients (90% of total revenues) revenues climbed 14% year over year on a reported basis and 11% at cc to $893 million.  The upside was driven by strong growth in Transformation Services.

General Electric revenues of $95 million declined 19% 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 $177 million, up 22% year over year. Adjusted operating income margin of 17.9% moved up 170 basis points (bps) year over year.

Genpact exited the quarter with cash and cash equivalents of $680.4 million compared with $644 million recorded at the end of the previous quarter. Long-term debt totaled $1.3 billion compared with $1.6 billion recorded in the prior quarter.

The company generated $160.6 million of cash from operating activities and capex was $7.3 million. Genpact returned $13 million to shareholders through share repurchases and $20 million through dividends in the quarter.

Revised 2021 Guidance

The company currently expects Global Clients' revenue growth to be 10.5%-11.5% compared with the previous guidance of 9-10%. At cc this revenue is expected to grow 9-11% compared with the prior guidance of 8-10%.

Adjusted income from operations margin is expected to be approximately at 16.5%, up from the previous expectation of 16%.

Genpact currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Some Other Business Services Companies

Equifax (EFX - Free Report) reported better-than-expected second-quarter 2021 results. Adjusted earnings of $1.98 per share beat the Zacks Consensus Estimate by 15.8% and improved 23.8% on a year-over-year basis. Revenues of $1.23 billion outpaced the consensus estimate by 6.4% and improved 25.6% year over year.

IHS Markit’s (INFO - Free Report) second-quarter fiscal 2021 adjusted earnings per share of 81 cents beat the consensus mark by 1.3% and increased 17.4% on a year-over-year basis. Total revenues came in at $1.2 billion, surpassing the consensus mark by 3.8% and increasing 15% from the year-ago quarter.

Omnicom (OMC - Free Report) reported second-quarter 2021 adjusted earnings of $1.46 per share that beat the consensus mark by 9.8% and increased 58.7% year over year. Total revenues of $3.6 billion surpassed the consensus estimate by 6.7% and increased 27.5% year over year.


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