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Genpact (G) Surpasses Q3 Earnings and Revenue Estimates
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Genpact Limited (G - Free Report) delivered impressive third-quarter 2019 results, with earnings and revenues beating the Zacks Consensus Estimate.
Adjusted earnings per share of 56 cents outpaced the consensus mark by 8% and increased 17% year over year. The increase was driven by higher operating profit of 7 cents and a lower effective tax rate of 2 cents, partially offset by negative impact of a penny related to lower foreign exchange balance sheet remeasurement gains and higher net interest expense.
Revenues amounted to $889 million, which beat the consensus estimate by 2% and improved 19% year over year on a reported basis as well as constant-currency basis. The top line was driven by large deals and growth in transformation services.
The stock has gained 48.4% year to date, significantly outperforming the 26.8% rally of the industry it belongs to.
Let’s check the numbers in detail.
Revenues in Detail
Total BPO revenues (84% of total revenues) increased 20% year over year to $749 million. Total IT revenues (16% of total revenues) came in at $139 million, up 12% year over year.
Global Clients (86% of total revenues) revenues climbed 12% year over year on a reported basis and 13% at cc to $768 million. Global Client BPO revenues of $666 million improved 14% year over year on a reported as well as constant-currency basis. Global Client IT revenues grew 4% year over year to $102 million.
General Electric (GE) revenues of $121 million increased 88% year over year. It contributed 14% to total revenues. GE BPO revenues improved 124% year over year to $83 million. GE IT revenues of $38 million increased 38%.
Adjusted income from operations totaled $142 million, up 15% year over year. Adjusted operating income margin decreased to 16% from 16.6% in the year-ago quarter.
Selling, general & administrative (SG&A) expenses amounted to $195 million, up 16% year over year. As a percentage of revenues, SG&A expenses were 21.9% compared with 22.5% in the prior-year quarter.
Balance Sheet and Cash Flow
Genpact exited the third quarter with cash and cash equivalents of $368 million compared with $378 million at the end of the previous quarter. Long-term debt (less current portion) totaled $976 million compared with $959 million at the end of the second quarter.
The company generated $220 million of cash from operating activities in the quarter. Capital expenditures were $25 million.
Genpact returned around $16 million to shareholders through dividend payout and $24 million through share repurchase in the quarter.
Guidance
Genpact has raised its 2019 EPS guidance. Adjusted EPS is now projected between $2.02 and $2.04. The Zacks Consensus Estimate is pegged at $2.03. The prior projection was between $2 and $2.02.
The company continues to expect revenues in the range of $3.46-$3.5 billion, the midpoint ($3.48 million) of which is below the current Zacks Consensus Estimate of $3.49 billion.
Global Client revenues are expected to register 9.5%-11% growth on a reported basis and 10.5-12% rise at cc.
Adjusted operating income margin is continued to be anticipated around 16%.
Some better-ranked stocks in the broader Zacks Business Services sector are Global Payments (GPN - Free Report) , Mastercard (MA - Free Report) and Cardtronics . While Global Payments sports a Zacks Rank #1, Mastercard and Cardtronics carry a Zacks Rank #2 (Buy).
Long-term expected EPS (three to five years) growth rate for Global Payments, Mastercard and Cardtronics is 17%, 16% and 4%, respectively.
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Genpact (G) Surpasses Q3 Earnings and Revenue Estimates
Genpact Limited (G - Free Report) delivered impressive third-quarter 2019 results, with earnings and revenues beating the Zacks Consensus Estimate.
Adjusted earnings per share of 56 cents outpaced the consensus mark by 8% and increased 17% year over year. The increase was driven by higher operating profit of 7 cents and a lower effective tax rate of 2 cents, partially offset by negative impact of a penny related to lower foreign exchange balance sheet remeasurement gains and higher net interest expense.
Revenues amounted to $889 million, which beat the consensus estimate by 2% and improved 19% year over year on a reported basis as well as constant-currency basis. The top line was driven by large deals and growth in transformation services.
The stock has gained 48.4% year to date, significantly outperforming the 26.8% rally of the industry it belongs to.
Let’s check the numbers in detail.
Revenues in Detail
Total BPO revenues (84% of total revenues) increased 20% year over year to $749 million. Total IT revenues (16% of total revenues) came in at $139 million, up 12% year over year.
Global Clients (86% of total revenues) revenues climbed 12% year over year on a reported basis and 13% at cc to $768 million. Global Client BPO revenues of $666 million improved 14% year over year on a reported as well as constant-currency basis. Global Client IT revenues grew 4% year over year to $102 million.
General Electric (GE) revenues of $121 million increased 88% year over year. It contributed 14% to total revenues. GE BPO revenues improved 124% year over year to $83 million. GE IT revenues of $38 million increased 38%.
Genpact Limited Revenue (TTM)
Genpact Limited revenue-ttm | Genpact Limited Quote
Operating Results
Adjusted income from operations totaled $142 million, up 15% year over year. Adjusted operating income margin decreased to 16% from 16.6% in the year-ago quarter.
Selling, general & administrative (SG&A) expenses amounted to $195 million, up 16% year over year. As a percentage of revenues, SG&A expenses were 21.9% compared with 22.5% in the prior-year quarter.
Balance Sheet and Cash Flow
Genpact exited the third quarter with cash and cash equivalents of $368 million compared with $378 million at the end of the previous quarter. Long-term debt (less current portion) totaled $976 million compared with $959 million at the end of the second quarter.
The company generated $220 million of cash from operating activities in the quarter. Capital expenditures were $25 million.
Genpact returned around $16 million to shareholders through dividend payout and $24 million through share repurchase in the quarter.
Guidance
Genpact has raised its 2019 EPS guidance. Adjusted EPS is now projected between $2.02 and $2.04. The Zacks Consensus Estimate is pegged at $2.03. The prior projection was between $2 and $2.02.
The company continues to expect revenues in the range of $3.46-$3.5 billion, the midpoint ($3.48 million) of which is below the current Zacks Consensus Estimate of $3.49 billion.
Global Client revenues are expected to register 9.5%-11% growth on a reported basis and 10.5-12% rise at cc.
Adjusted operating income margin is continued to be anticipated around 16%.
Zacks Rank & Stocks to Consider
Genpact currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the broader Zacks Business Services sector are Global Payments (GPN - Free Report) , Mastercard (MA - Free Report) and Cardtronics . While Global Payments sports a Zacks Rank #1, Mastercard and Cardtronics carry a Zacks Rank #2 (Buy).
Long-term expected EPS (three to five years) growth rate for Global Payments, Mastercard and Cardtronics is 17%, 16% and 4%, respectively.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
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