G - Embedded Expectations Analysis - 2020 10 08
Genpact Limited (G:USA) currently trades near historical averages relative to Uniform earnings, with an 18.4x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management may have concerns about margins, liquidity, and Transformation ServicesSpecifically, management may lack confidence in their ability to continue their strong execution, improve the user experience, and moderate their operating expenses. In addition, they may have concerns about the revenue mix in their Transformation Services, the sustainability of cloud-based services and solutions consumption, and their ability to allow employees to return to the office. Furthermore, they may lack confidence in their ability to refine gross margins, maintain their liquidity position, and sustain their days sales outstanding (DSO). Additionally, management may have concerns about continued weakness in demand, particularly in bookings, and perpetual declines in productivity in their Global Clients (GC) segment. Finally, they may lack confidence in their ability to sustain sequential revenue growth
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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