Genpact (G) Surpasses Earnings And Revenue Estimates In Q4

Genpact Limited (NYSE:G) delivered impressive fourth-quarter 2018 results, with earnings and revenues beating the Zacks Consensus Estimate.

The stock has gained 4.2% on Thursday’s after hours trading on encouraging 2019 guidance. Management projects revenues in the range of $3.33-$3.39 billion, which is above the current Zacks Consensus Estimate of $3.29 billion.

Adjusted earnings per share of 52 cents in the quarter outpaced the consensus mark by 4 cents and increased 21% year over year. The bottom line was driven by a positive impact of 11 cents from higher operating profits and a penny from lower share count, which were, however, partially offset by a tax impact of 3 cents due to the U.S. tax laws.

Revenues amounted to $835 million, which beat the consensus estimate by $25.6 million and improved 14% year over year on a reported basis and15% on a constant-currency (cc) basis. The top line was driven by strong growth in the company’s Hi-tech, consumer goods and retail and manufacturing verticals.

So far this year, shares of Genpact have gained 13.8% compared with 10.8% rise of the industry.

Let’s check the numbers in detail.

Revenues in Detail

Total BPO revenues (84% of total revenues) increased 14% year over year to $700 million. Total IT revenues (16% of total revenues) totaled $135 million, up 12% year over year.

Global Clients (90% of total revenue) revenues climbed 13% year over year on a reported basis and 14% at cc to $755 million.

Under Global Client, Global Client BPO revenues of $650 million improved 13% year over year on a reported basis and 14% at cc. Global Client IT revenues grew 11% year over year to $105 million.

General Electric (NYSE:GE) revenues of $80 million increased24% year over year. It contributed 10% total revenues.

GE BPO revenues improved 30% year over year to $50 million. GE IT revenues of $31 million increased 16% from the year-ago quarter’s number.

Operating Results

Adjusted income from operations totaled $142 million, up 24% year over year. Adjusted operating income margin increased to 17% from 15.7% in the year-ago quarter.

Selling, general & administrative (SG&A) expenses amounted to $178.58 million, down 5.4% year over year. As a percentage of revenues, SG&A expenses were 21.4% compared with 25.7% in the prior-year quarter.

Genpact Limited Price, Consensus and EPS Surprise

Genpact exited the fourth quarter with cash and cash equivalents of $504.47 million compared with $401.23 million at the end of the previous quarter. Long-term debt (less current portion) totaled $1 billion compared with $983.88 million at the end of third-quarter 2018.

The company generated $136.71 million of cash from operating activities in the reported quarter. Capital expenditures were $13.9 million.

Genpact returned almost $215 million to shareholders through share repurchase and dividend payment in 2018.

Guidance

For 2019, Genpactexpectsrevenues in the range of $3.33-$3.39 billion, which indicates year-over-year growth of almost 11-13% on a reported basis and 12-14% at cc. The Zacks Consensus Estimate is pegged at $3.29 billion.

Global Client revenues are expected to register 9.0-10.5% growth on a reported basis and 10.0-11.5% riseat cc. Adjusted operating income margin is anticipated to be around 16%.

Adjusted earnings are projected between $1.96 and $2.00.The Zacks Consensus Estimate is peggedat $1.98.

Zacks Rank & Upcoming Releases

Genpact currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Services sector are keenly awaiting fourth-quarter 2018 earnings reports of key players like IQVIA Holdings (NYSE:IQV) , Waste Management (NYSE:WM) and TransUnion (NYSE:TRU) . All these companies are scheduled to release resultson Feb 14, before market open.

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