Genpact Limited ( G Quick Quote G - Free Report) maintains a strong foothold in the BPO services market, driven by its domain expertise in business analytics, digital solutions, and consulting. This competitive edge is further reinforced by its diverse and robust clientele worldwide. Additionally, the company's commitment to consistently rewarding shareholders with both dividend payments and share repurchases not only enhances investor confidence but also contributes positively to its earnings per share.
Genpact has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
Factors That Augur Well
Genpact is a dominant player in the BPO services market, excelling in business analytics, digital solutions, and consulting. The company provides industry-specific solutions for IIoT, user experience, supply-chain management, data engineering, digital content management, risk management, procurement, logistics, and more. Genpact's integration of process, analytics, and digital technologies, along with deep domain expertise, attract a growing customer base. Strategic acquisitions, cost control, and share repurchases are expected to drive long-term success.
Artificial Intelligence (AI) presents a significant growth opportunity for Genpact. Digital Smart Enterprise Processes , which is a patented approach, enhances efficiency and process quality using AI, specialized digital tech, Lean Six Sigma, and experience-centric principles. Genpact Cora, an automation to AI platform, accelerates digital transformations. Acquisitions like Rage Framework and design thinking-focused firms expand Genpact's AI portfolio, positioning it well for future AI advancements.
Genpact's commitment to shareholders is evident through share repurchases and dividends. In 2022, the company repurchased $214.1 million worth of shares, with $298.2 million in 2021 and $137.1 million in 2020. Dividend payments totaled $91.8 million in 2022, $80.5 million in 2021, and $74.2 million in 2020, reflecting Genpact's dedication to creating shareholder value and confidence in its business.
Genpact's current ratio at the end of second-quarter 2023 was pegged at 1.88, higher than the current ratio of 1.84 reported at the end of the prior-quarter and the year-ago quarter’s 1.58. Increasing current ratio bodes well as it indicates that the company will have no problem meeting its short-term debt obligations.
The outsourcing sector relies heavily on foreign talent and is labor-intensive. Increased competition for talent may lead to higher labor costs, potentially limiting the industry's growth. Genpact, as a player in this sector, could be impacted by these challenges.
Genpact also faces a notable concentration of clients in specific geographic regions. In 2022, more than 50% of the company's revenues came from clients in India, and more than 20% from clients in North and Latin America. Furthermore, in 2022, more than 35% of Genpact's revenues were generated from clients in the High Tech and Manufacturing sector. This level of dependency on particular regions and industries may pose long-term concerns for investors.
G currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Here are a few better-ranked stocks from the broader
Business Service sector that warrant a look: DocuSign ( DOCU Quick Quote DOCU - Free Report) beat the Zacks Consensus Estimate in all the four trailing quarters and has an earning surprise of 25.6%. The current consensus estimate for revenues indicates an 8.1% increase from the year-ago figure. The consensus mark for earnings is pegged at $2.52 per share, indicating 24.1% year-over-year growth. DOCU currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. ABM Industries ( ABM Quick Quote ABM - Free Report) has beat the Zacks Consensus Estimate in three of the four trailing quarters and matched on one instance. The average surprise is 2.64%.The consensus estimate for fiscal 2023 revenues is pegged at $8.08 billion, which is 4.2% higher than the year-ago reported figure. The consensus estimate for the bottom line is pegged at $3.51 per share, indicating a 4.1% year-over-year decline. ABM holds a Zacks Rank #2 (Buy). Accenture ( ACN Quick Quote ACN - Free Report) carries a Zacks Rank of 2. The Zacks Consensus Estimate for fiscal 2023 revenues is pegged at $64.18 billion, which is 4.2% higher than the year-ago reported figure. The consensus estimate for ACN’s bottom line is pegged at $11.59 per share, indicating 4.2% year-over-year growth. It beat the consensus estimate in all the four trailing quarters, the average surprise being 5.7%.