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Genpact (G) Dominates BPO Service Market Amid Rising Costs

Genpact Limited G has been managing business processes for companies around the world. The company combines process expertise, information technology and analytical capabilities with operational insight and experience in diverse industries to provide a wide range of services by virtue of its global delivery platform. It beat the Zacks Consensus Estimate for earnings in all four trailing quarters. The earnings beat has been on the back of its strong customer base amid an increase in talent costs due to stiff competition.

Genpact reported mixed first-quarter 2023 results, wherein earnings beat the consensus estimate but revenues missed the same. Adjusted earnings per share (excluding 11 cents from non-recurring items) of 68 cents outpaced the Zacks Consensus Estimate by 4.6% and increased 13.3% year over year. Revenues of $1.09 billion missed the consensus estimate by 0.6%. However, the top line increased 2% year over year on a reported basis and 4% on a constant currency basis.

Current Situation of Genpact

Genpact is benefiting from its dominant position in the Business Process Outsourcing market. The company has 800 clients spread over 35 countries. G’s expertise in business analytics, digital and consulting services and its offerings ranging from Industrial Internet of Things, user experience, order and supply chain management, data engineering, digital content management and risk management, direct procurement and logistics services make it one of the leading providers of industry-specific solutions.

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Artificial Intelligence (AI) is one of the key growth drivers for Genpact. Genpact Cora is an automation to AI-based platform that combines the company’s proprietary automation, analytics and AI technologies into a single platform and accelerates clients’ digital transformations. The acquisition of Rage Framework and Tandem Seven positions the company well to benefit from the improvement in AI.

Genpact Limited Revenue (TTM)

Genpact Limited Revenue (TTM)
Genpact Limited Revenue (TTM)

Genpact Limited revenue-ttm | Genpact Limited Quote

The company has a strong liquidity position, with the current ratio at the end of first-quarter 2023 being 1.84, higher than the current ratio of 1.61 at the end of fourth-quarter 2022 and the prior-year quarter’s figure of 1.44.

G has been taking initiatives to return value to its shareholders in the form of dividends and share repurchases. During 2022, 2021 and 2020, Genpact repurchased shares worth $214.1 million, $298.2 million and $137.1 million, respectively. The company paid $91.8 million, $80.5 million, and $74.2 million in dividends to its shareholders in 2022, 2021 and 2020, respectively.

Genpact operates in a labor-intensive industry with stiff competition. The rising competition increases the talent cost as well, which may be a headwind.

Shares of Genpact have declined 16.3% in the past year, compared with its industry’s 3.7% decrease.

Zacks Rank and Stocks to Consider

G currently carries a Zacks Rank #3 (Hold).

Investors interested in the Zacks Business Services sector can consider the following stocks:

Green Dot GDOT: For second-quarter 2023, the Zacks Consensus Estimate of Green Dot’s revenues suggests a decline of 4.5% year over year to $339.2 million and the same for earnings indicates a 56.8% plunge to 32 cents per share. The company has an impressive earning surprise history, beating the consensus mark in all four trailing quarters, the average surprise being 37.3%.

GDOT has a Value score of A and currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Maximus MMS: For second-quarter 2023, the Zacks Consensus Estimate of Maximus’ revenues suggests an increase of 6.1% year over year to $1.2 billion and the same for earnings indicates a 46.2% rise to $1.14 per share. The company has an impressive earning surprise history, beating the consensus mark in three instances and missing on one instance, the average surprise being 9.6%.

MMS has a VGM score of A along with a Zacks Rank of 1.

Rollins ROL: For second-quarter 2023, the Zacks Consensus Estimate of Rollins’ revenues suggests growth of 12.8% year over year to $805.2 million and the same for earnings indicates a 15% increase to 23 cents per share. The company has an impressive earning surprise history, beating the consensus mark in three of the four trailing quarters and missing on one instance, the average surprise being 5.53%.

ROL currently carries a Zacks Rank of 2.

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Genpact Limited (G) : Free Stock Analysis Report

Green Dot Corporation (GDOT) : Free Stock Analysis Report

Rollins, Inc. (ROL) : Free Stock Analysis Report

Maximus, Inc. (MMS) : Free Stock Analysis Report

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