G - Embedded Expectations Analysis - 2019 10 16
Genpact Limited (G:USA) currently trades near corporate averages relative to Uniform Earnings, with a 20.9x Uniform P/E. At these levels, the market has bearish expectations for the firm, but management is confident about their margins, revenues, and the size of their market.Specifically, management is confident that their adjusted operating income margin is up 40bps year-over-year, and they are confident that their business process outsourcing revenues increased 23% year-over-year. Furthermore, they are confident that their total addressable market has grown.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- 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
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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