Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks, with a focus on valuation metrics and specific traits highlighted by Zacks' Style Scores system [1] Company Summary: Genpact (G) - Genpact currently holds a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential for value investors [2] - The stock has a Forward P/E ratio of 11.80, significantly lower than the industry's average Forward P/E of 24.66, with a 12-month range of 9.75 to 12.05 [2] - Genpact's PEG ratio stands at 1.41, compared to the industry's average PEG of 2.66, with a 12-month range of 0.97 to 1.50 [2] - The P/CF ratio for Genpact is 9.42, which is attractive against the industry's average P/CF of 16.44, with a 12-month range of 7.46 to 13.45 [3] - These metrics suggest that Genpact is likely undervalued, making it an appealing value stock at present [3]

Core Insights - Genpact has been recognized in Forbes' "World's Best Management Consulting Firms" list for 2024, highlighting its strong industry reputation and expertise in leveraging data, technology, and AI for client value and transformative growth [1][2] - The recognition reflects Genpact's commitment to client-centricity and its ability to deliver significant business outcomes [1] - The evaluation process involved an extensive survey of 8,500 consultants and clients across 29 countries, assessing firms on performance in 13 industries and 14 functional areas, resulting in the identification of 225 top firms [1] Company Overview - Genpact is a global professional services and solutions firm with over 125,000 employees in more than 30 countries, focused on delivering outcomes that shape the future [3] - The company emphasizes its deep business and industry knowledge, digital operations services, and expertise in data, technology, and AI to serve leading enterprises, including those in the Fortune Global 500 [3] - Genpact's mission is driven by a purpose to create lasting value for clients through operational excellence, enhanced customer experience, and unlocking new growth opportunities [2][3]

Core Viewpoint - Genpact Limited (G) is identified as a potential stock pick due to a recent "golden cross" event, indicating a bullish breakout possibility [1] Technical Analysis - The "golden cross" occurred when G's 50-day simple moving average surpassed its 200-day simple moving average, a significant indicator of bullish momentum [1] - A successful golden cross involves three stages: a price decline bottoming out, the shorter moving average crossing above the longer one, and maintaining upward momentum [1] - G has experienced a 13.8% increase over the last four weeks, suggesting it may be on the verge of a breakout [1] Earnings Outlook - The company currently holds a 2 (Buy) rating on the Zacks Rank, reinforcing the bullish sentiment [1] - For the current quarter, there have been no cuts to earnings estimates, indicating a positive earnings outlook [1]

Core Insights - Genpact's Chief Financial Officer, Mike Weiner, will present at the Citi Global TMT Conference on September 4, 2024, at 3:00 p.m. Eastern Time [1] - The presentation will be available via live webcast on Genpact's Investor Relations website, with a replay accessible until September 5, 2025 [1] Company Overview - Genpact is a global professional services and solutions firm with over 125,000 employees across more than 30 countries [2] - The company focuses on delivering outcomes that shape the future, driven by curiosity, entrepreneurial agility, and a commitment to creating lasting value for clients [2] - Genpact serves and transforms leading enterprises, including those in the Fortune Global 500, leveraging deep business and industry knowledge, digital operations services, and expertise in data, technology, and AI [2]

Core Insights - Genpact (G) is currently rated as a 2 (Buy) by Zacks Rank and has an A for Value, indicating strong potential for investors [2] - The stock has a P/E ratio of 11.69, significantly lower than the industry average of 23.76, suggesting it may be undervalued [2] - Genpact's Forward P/E has fluctuated between 9.75 and 12.05 over the past year, with a median of 10.95, indicating stable valuation metrics [2] - The PEG ratio for Genpact is 1.48, compared to the industry average of 2.56, further supporting the notion of undervaluation [2] - The P/CF ratio for Genpact stands at 9.08, well below the industry average of 15.80, highlighting its strong cash flow outlook [3] - Overall, Genpact's financial metrics suggest it is an impressive value stock with a strong earnings outlook [3]

Core Insights - Genpact's shares have increased by 13.5% over the past month, reaching a new 52-week high of $38.37, and have gained 10.1% since the start of the year, outperforming the Zacks Business Services sector and the Zacks Outsourcing industry [1] Financial Performance - Genpact has consistently exceeded earnings expectations, reporting an EPS of $0.79 against a consensus estimate of $0.73 in its last earnings report on August 8, 2024, and beating revenue estimates by 2.64% [2] - For the current fiscal year, Genpact is projected to achieve earnings of $3.07 per share on revenues of $4.67 billion, reflecting a 3.02% increase in EPS and a 4.39% increase in revenues [2] - The next fiscal year forecasts earnings of $3.35 per share on $4.97 billion in revenues, indicating a year-over-year change of 9.07% in EPS and 6.3% in revenues [2] Valuation Metrics - Genpact's current valuation metrics show it trading at 12.5X current fiscal year EPS estimates, below the peer industry average of 16.7X, and at 12.2X on a trailing cash flow basis compared to the peer group's average of 12.5X [4] - The stock has a PEG ratio of 1.49, which does not place it among the top tier of stocks from a value perspective [4] Zacks Rank - Genpact holds a Zacks Rank of 2 (Buy), supported by rising earnings estimates, which aligns with the recommendation for investors to select stocks with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B [5] - The company has a Value Score of A, with Growth and Momentum Scores of B, resulting in a combined VGM Score of A, indicating strong potential for future performance [3][5]

Core Insights - Genpact Limited reported better-than-expected second-quarter 2024 results with an EPS of 79 cents, surpassing the consensus estimate by 8.2% and showing a year-over-year growth of 9.7% [1] - Revenues reached $1.18 billion, beating the consensus mark by 2.6% and increasing 6.4% from the previous year [1] Quarterly Performance Details - Data-Tech-AI services revenues, accounting for 46% of total revenues, increased 4% year over year to $546 million, exceeding the estimate of $508.8 million [2] - Digital Operations services revenues of $630 million (54% of total revenues) grew 9% year over year but missed the estimate of $637.2 million [2] - Adjusted income from operations was $198.4 million, reflecting a 7% year-over-year growth, with an adjusted operating income margin of 16.9%, up 10 basis points year over year [2] - Cash and cash equivalents at the end of the quarter were $914.2 million, a significant increase from $478.4 million in the previous quarter, while long-term debt rose to $1.2 billion from $818.3 million [2] Cash Flow and Shareholder Returns - The company generated $209 million in cash from operating activities, with capital expenditure at $19.3 million [3] - Genpact returned $27.3 million in dividends to shareholders and repurchased shares worth $63 million [3] Future Guidance - For Q3 2024, Genpact expects revenues between $1.18 billion and $1.186 billion, with gross margin and adjusted income from operating margin anticipated at around 35.4% and 17.2%, respectively [4] - For the full year 2024, the revenue forecast is between $4.656 billion and $4.701 billion, with adjusted EPS expected in the range of $3.14 to $3.18 [4] - Gross margin and adjusted income from operating margin for 2024 are anticipated to be around 35.3% and 17%, respectively [4]

Core Insights - Genpact has been recognized as a Leader in the HFS Research Supply Chain Services 2024 Horizon assessment for its innovation in supply chain strategy and technology [1][2] - The company is focusing on enhancing supply chain agility through advanced technologies and AI, enabling clients to make quick decisions and meet shifting consumer demands [2][3] Group 1: Company Recognition and Strategy - Genpact's service capability includes managing both forward and after-sales supply chain services through an outcome-driven model, potentially boosting client revenue by up to 45% [2] - The company has formed strategic partnerships with AWS and Salesforce to enhance its supply chain tools, emphasizing data management and predictive analytics for efficient operations [2][3] Group 2: Technological Innovation and Sustainability - Genpact is reshaping the supply chain management landscape with a circular supply chain vision and a commitment to sustainability [3] - The company is expanding its capabilities in real-time analytics and AI-driven decision-making, positioning itself as a leader in next-generation supply chain innovations [3]

Financial Performance - Net revenues for Q2 2024 reached $1,176,212, a 6.4% increase from $1,105,524 in Q2 2023[13] - Gross profit for the first half of 2024 was $812,856, up 6.9% from $760,281 in the same period last year[13] - Net income for the six months ended June 30, 2024, was $238,937, reflecting a 7.5% increase compared to $222,353 in 2023[13] - The company reported a diluted earnings per share of $0.67 for Q2 2024, compared to $0.63 in Q2 2023, indicating a 6.3% increase[13] - Operating expenses for the first half of 2024 were $474,673, up from $445,911 in the same period last year, reflecting a 6.5% increase[13] - Cash provided by operating activities increased to $183,713,000 in 2024 from $137,382,000 in 2023, reflecting a growth of 33.8%[31] Assets and Liabilities - Total assets increased to $5,178,265 as of June 30, 2024, up from $4,805,713 at the end of 2023, representing a growth of 7.7%[10] - Total liabilities rose to $2,840,506 as of June 30, 2024, compared to $2,557,321 at the end of 2023, marking an increase of 11.1%[10] - The company’s retained earnings increased to $1,176,459 as of June 30, 2024, from $1,085,209 at the end of 2023, a rise of 8.4%[10] - Total equity as of June 30, 2024, was $2,337,759,000, up from $2,248,392,000 as of January 1, 2024, indicating a growth of 4.0%[28] Cash and Cash Equivalents - Cash and cash equivalents increased significantly to $914,171 as of June 30, 2024, from $583,670 at the end of 2023, a growth of 56.7%[10] - Cash and cash equivalents at the end of the period increased to $914,171,000 from $491,308,000, representing an increase of 86.1%[31] Dividends - The company declared a dividend of $0.1525 per common share for Q2 2024, compared to $0.1375 in Q2 2023, representing an increase of 10.9%[24] - The company paid dividends of $54,829,000, which is an increase from $50,286,000 in the previous period, marking an increase of 9.9%[31] Stock and Share Repurchase - The company repurchased and retired 2,784,988 shares, resulting in a reduction of retained earnings by $92,602,000[28] - During the six months ended June 30, 2024, the company repurchased 2,784,988 common shares at a weighted average price of $33.26 per share, for an aggregate cash amount of $92,630[207] - The company has authorized repurchases of up to $2,250,000 under its existing share repurchase program[206] Employee Compensation and Benefits - The net defined benefit plan costs for the six months ended June 30, 2024, were $10,055, compared to $8,794 for the same period in 2023, reflecting an increase of approximately 14.3%[165] - Total contributions to defined contribution plans increased from $67,046 for the six months ended June 30, 2023, to $71,490 for the same period in 2024, a rise of about 6.6%[166] - Stock-based compensation expense decreased to $27,550,000 in 2024 from $41,536,000 in 2023, a reduction of 33.7%[31] - Stock-based compensation costs for the three months ended June 30, 2024, were $18,046, down from $21,344 for the same period in 2023, a decrease of approximately 15.5%[179] Revenue Recognition - The Company recognizes revenue primarily from business process management services, including analytics and consulting, on a time-and-material, transaction, or fixed-price basis[52] - Revenue from fixed-price contracts is recognized ratably over the term of the agreement, while revenues from time-and-materials and transaction-based contracts are recognized as services are provided[52] - Deferred revenue is recorded for process transition activities and recognized ratably over the period in which related services are performed[54] - The Company uses the input method to measure progress towards completion for performance obligations satisfied over time[58] Debt and Financing - As of June 30, 2024, the outstanding amount under the term loan was $489,167, with a maturity profile indicating a significant payment of $423,724 due in 2027[152] - The company had a total of $23,302 and $23,001 available in credit facilities as of December 31, 2023, and June 30, 2024, respectively, with $9,336 and $9,108 utilized[146] - The company was in compliance with the financial covenants of the 2022 Credit Agreement, maintaining a net debt to EBITDA leverage ratio of less than 3x and an interest coverage ratio of more than 3x as of June 30, 2024[150] - As of June 30, 2024, the total long-term debt increased to $1,633,528, up from $1,256,962 as of December 31, 2023, representing a growth of approximately 30%[158] Impairment and Allowance for Credit Losses - The allowance for credit losses increased to $12,638,000 in 2024 from $6,521,000 in 2023, reflecting a rise of 93.5%[31] - The company recorded a charge of $1,338 for credit losses on deferred billings for the three months ended June 30, 2024, compared to $147 for the same period in 2023[97] - The allowance for credit losses on accounts receivable decreased from $18,278 as of December 31, 2023, to $16,833 as of June 30, 2024[95] Business Strategy and Operations - The company divested a business in December 2022 as part of a strategy to focus on services with greater growth opportunities[130] - The Company adopted ASU No. 2023-01 regarding leasehold improvements effective January 1, 2024, with no material impact on consolidated results[90] - The Company is assessing the impact of ASU No. 2023-07 on segment reporting disclosures, effective for fiscal years beginning after December 15, 2023[93]

Core Insights - Genpact reported quarterly earnings of $0.79 per share, exceeding the Zacks Consensus Estimate of $0.73 per share, and showing an increase from $0.72 per share a year ago, representing an earnings surprise of 8.22% [1] - The company generated revenues of $1.18 billion for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 2.64% and up from $1.11 billion year-over-year [1] - Genpact has consistently outperformed consensus EPS estimates over the last four quarters, achieving this four times [1] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.78 on revenues of $1.16 billion, while for the current fiscal year, the estimate is $3.04 on revenues of $4.61 billion [4] - The estimate revisions trend for Genpact is mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [4] Industry Context - The Outsourcing industry, to which Genpact belongs, is currently ranked in the bottom 29% of over 250 Zacks industries, which may negatively impact stock performance [5] - The performance of Genpact's stock may also be influenced by the broader industry outlook and trends in earnings estimate revisions [3][5]