Genpact Limited (G) Stock Has Room to Grow

Genpact Limited (NYSE:G) stands for “generating business impact” and began as a business unit within General Electric Company (NYSE:GE) two decades ago. Unfortunately, over the last year or so, Genpact hasn’t generated much shareholder impact, despite that catchy slogan. G stock is up around 3.5% just over a month into the new year, but is nearly that same amount in the red if we zoom out to the past 12 months.

G Stock: Genpact Limited (G) Stock Has Room to GrowStill, I believe Genpact is about to start a more substantial recovery. Its earnings call this morning — including an earnings beat and a slight miss on revenue — could be the beginning of a run that could tally up double-digit gains for 2017.

More specifically, Genpact is a business-to-business company which hangs its hat on efficiency. The company offers digital solutions related to payments, processing services, risk and compliance, customer and channel management, and business insights and optimization. And it boasts 75,000 employees in 25 countries.

For the fourth quarter, G stock posted earnings growth of 21%, while its full-year earnings growth was around 16%. That’s solid considering Genpact is facing difficult currency exchange.

Genpact Stock a Good Deal

But despite those headwinds, Genpact still offers great deal for shareholders, as stock has a trailing price-to-earnings ratio of 21, which is well below the industry average of 35, and a forward P/E of just 16. This latest earnings beat wasn’t a surprise either, as Genpact has posted an earnings beat in each of the last four quarters as well.

The previous quarter represented the smallest beat thanks in part to lower technology spending in the investment banking and healthcare markets. But it wasn’t too bad: non-GAAP earnings still grew 9% year over year to 36 cents — 3 cents better than Wall Street hoped.

Plus, a recent acquisition by Genpact could fuel more growth down the line. The company just reached an agreement to acquire an Australian arm of Fiserv Inc (NASDAQ:FISV), which serves three of the four major retail banks in Australia, handling approximately 70% of all checks processed in the Australian market, according to the press release.

Looking forward a bit further, Genpact’s earnings are expected to maintain a double-digit average over the next five years, smoothing out right around 12%. That’s almost double the average of the last five years, when Genpact stock still managed average gains of almost 7%.

Add it up, and I like the moves Genpact is making and I like the estimates on tap. Efficiency is never going to go out of style across industries. Even if discretionary spending on B2B tech has been soft in spots of late, I like the prospects for the near-term and believe Genpact stock has some immediate value to realize.

I expect investors to realize that now that the latest earnings report has come out, and recommend a buy before Genpact gets its post-earnings pop.

Hilary Kramer is the editor of GameChangersBreakout StocksHigh Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.

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