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Genpact G stock has gained 52% in a year, outperforming the industry's 3.3% fall and the 8.4% increase of the Zacks S&P 500 composite.
G reported impressive fourth-quarter 2024 results. Quarterly EPS of 91 cents surpassed the consensus estimate by 5.8% and grew 11% year over year. Revenues of $1.25 billion beat the consensus mark by 1.7% and increased 8.9% from the year-ago quarter.
How is Genpact Faring?
The company’s dominance in the Business Process Outsourcing services market is due to its expertise in business analytics, digital and consulting services. It is an industry-leading provider of the Industrial Internet of Things (IIoT), user experience, order and supply chain management, data engineering, digital content and risk management, direct procurement, logistics services, and more.
The company’s focus on integrating process, analytics, and digital technologies, coupled with its deep domain expertise, is creating a medium to win customers frequently. We anticipate customer base expansion, disciplined cost management, buyouts, and aggressive share repurchases to help the company retain its success in the long run.
Artificial Intelligence (AI) is vital for Genpact’s growth. Its patented approach, Digital Smart Enterprise Processes (Digital SEPs), improves clients’ business processes. Digital SEPs reduce inefficiency and improve process quality using AI, advanced domain-specific digital technologies, Lean Six Sigma methodologies, and experience-centric principles.
In 2024, 2023, 2022 and 2021, G repurchased shares worth $252.7 million, $225.4 million, $214.1 million and $298.2 million, respectively. The company paid out $108 million, $100 million, $91.8 million and $80.5 million in dividends to its shareholders in 2024, 2023, 2022 and 2021, respectively. Such shareholder-friendly moves indicate the company’s commitment to creating value for shareholders and underline its confidence in its business.
Genpact's current ratio at the end of the fourth quarter of 2024 was 2.16, lower than the industry average of 2.29. Despite being lower than the industry average, the company maintains a current ratio of more than 1, indicating efficient short-term debt coverage abilities.
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G operates within a mature industry that has a slower rate of expansion, marginally above inflation levels. Additionally, the industry is saturated with much larger competitors than Genpact. While G is a solid player, it does not lead the market.
The outsourcing industry is labor-intensive and significantly dependent on foreign talent. Rising talent costs due to competition could hurt the industry’s growth, in turn, affecting Genpact.