EXLS - Embedded Expectations Analysis - 2021 08 25
ExlService Holdings, Inc. (EXLS:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 24.0x Uniform P/E. Even at these levels, the market is pricing in bearish expectations for the firm. However, given management's confidence about Analytics growth and their partnerships with clients, market expectations are still too bearish, and equity outperformance is warranted.Specifically, management is confident analytics demand was driven by their enterprise-wide adoption of data-driven decision-making, their efforts to hyper-personalize customer interactions, and the accelerated shift to the cloud. Similarly, they are confident the Analytics business will exceed their own expected growth rate. Management is also confident they have formed closer partnerships with their clients, which has helped them get through the uncertainty of the past several quarters.
Given management's confidence about Analytics growth and their partnerships with clients, market expectations are too bearish, and long-term equity outperformance is warranted.
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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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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