EXLS - Embedded Expectations Analysis - 2021 03 22
ExlService Holdings, Inc. (EXLS:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 19.8x Uniform P/E, implying bearish expectations for the firm. Although management's concerns about revenue growth, digital transformation, and work-from-home (WFH) models suggest the potential for near-term headwinds, market expectations are too bearish, and long-term equity outperformance is warrantedSpecifically, management may lack confidence in their ability to meet their accelerated revenue growth guidance, address client digital transformation needs, and grow Operations Management segment revenues and pipeline. Furthermore, management may lack confidence in their ability to generate data-driven insights for clients to support transformation agendas, particularly in AI, and reduce manual-intensive tasks for clients. Moreover, they may have concerns about the effectiveness of current work-from-home models as well as the pace of recovery of their travel vertical
Although management's concerns about revenue growth, digital transformation, and work-from-home models suggest the potential for near-term headwinds, market expectations are still too bearish given the firm's scalable solutions and robust economic moat, and long-term equity outperformance is warranted for EXLS
ExlService Holdings is a holding company. Through its subsidiaries, the company is an operations management and analytics company. The company's operations management services involve the transfer to the company's business operations of a client such as claims processing, clinical operations, or financial transaction processing, after which the company administers and manages those operations for its client on an ongoing basis, or in case of consulting, consulting services related to transformation services, including digital transformation services. The company's Analytics services focus on driving business outcomes for its customers by generating data-driven insights across various parts of its customers' business.
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