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Here's Why Hold Strategy is Apt for ExlService (EXLS) Stock Now
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ExlService Holdings, Inc. (EXLS - Free Report) shares have had a decent run in the past three months. The stock has gained 5% against the 1% decline of the industry it belongs to. The outperformance is partly due to better-than-expected results in the past four quarters.
ExlService’s earnings for 2023 and 2024 are expected to increase 18.3% and 14%, respectively. Revenues are expected to grow 15.1% and 10.9%, respectively, in 2023 and 2024.
ExlService is an excellent strategic partner for data-led businesses. The company’s market differentiation strategy hovers around applying the combination of data-led capabilities and domain expertise. Advanced analytics, data and AI-based digital solutions are helping the company develop and bring integrated services and solutions under one brand.
EXLS has a large addressable market that includes healthcare, banking, insurance, retail, media and technology industries. It remains focused on expanding its presence in both well-established and emerging markets, building its client portfolio in finance and accounting and consulting services across all its business segments.
ExlService has a consistent record of share repurchases. It repurchased shares worth $68.5 million, $115.6 million and $77.8 million in 2022, 2021 and 2020, respectively. Such moves help instill investors’ confidence in the stock and positively impact earnings per share.
EXLS’ current ratio (a measure of liquidity) at the end of the third quarter of 2023 was 2.13, higher than the year-ago quarter’s 2.03. The improvement in the current ratio is a welcome development as it implies that the company has enough cash to meet its short-term obligations. A current ratio of more than 1 often indicates that the company will be easily paying off its short-term obligations.
A Negative
ExlService has neither paid nor does it have any plan to pay cash dividends on common stock. So, the only way to achieve a return on investment on the company’s stock is share price appreciation, which is not guaranteed. Investors seeking cash dividends should avoid buying ExlService’s shares.
Zacks Rank and Stocks to Consider
ExlService currently carries a Zacks Rank #3 (Hold).
Investors interested in the Zacks Business Services sector can consider the following better-ranked stocks:
Gartner (IT - Free Report) : The Zacks Consensus Estimate for Gartner’s 2023 revenues indicates 7.9% growth from the year-ago figure. Its earnings are expected to decline 1.9% year over year. The company beat the consensus estimate in each of the four quarters, with the average surprise being 34.4%.
Broadridge Financial Solutions (BR - Free Report) : The Zacks Consensus Estimate for Broadridge’s fiscal 2024 revenues indicates 7.7% growth from the year-ago figure. Its earnings are expected to grow 10.1% year over year. The company beat the consensus estimate in three of the past four quarters and matched once, with the average surprise being 5.4%.
BR currently carries a Zacks Rank of 2.
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Here's Why Hold Strategy is Apt for ExlService (EXLS) Stock Now
ExlService Holdings, Inc. (EXLS - Free Report) shares have had a decent run in the past three months. The stock has gained 5% against the 1% decline of the industry it belongs to. The outperformance is partly due to better-than-expected results in the past four quarters.
ExlService’s earnings for 2023 and 2024 are expected to increase 18.3% and 14%, respectively. Revenues are expected to grow 15.1% and 10.9%, respectively, in 2023 and 2024.
ExlService Holdings, Inc. Price
ExlService Holdings, Inc. price | ExlService Holdings, Inc. Quote
Tailwinds
ExlService is an excellent strategic partner for data-led businesses. The company’s market differentiation strategy hovers around applying the combination of data-led capabilities and domain expertise. Advanced analytics, data and AI-based digital solutions are helping the company develop and bring integrated services and solutions under one brand.
EXLS has a large addressable market that includes healthcare, banking, insurance, retail, media and technology industries. It remains focused on expanding its presence in both well-established and emerging markets, building its client portfolio in finance and accounting and consulting services across all its business segments.
ExlService has a consistent record of share repurchases. It repurchased shares worth $68.5 million, $115.6 million and $77.8 million in 2022, 2021 and 2020, respectively. Such moves help instill investors’ confidence in the stock and positively impact earnings per share.
EXLS’ current ratio (a measure of liquidity) at the end of the third quarter of 2023 was 2.13, higher than the year-ago quarter’s 2.03. The improvement in the current ratio is a welcome development as it implies that the company has enough cash to meet its short-term obligations. A current ratio of more than 1 often indicates that the company will be easily paying off its short-term obligations.
A Negative
ExlService has neither paid nor does it have any plan to pay cash dividends on common stock. So, the only way to achieve a return on investment on the company’s stock is share price appreciation, which is not guaranteed. Investors seeking cash dividends should avoid buying ExlService’s shares.
Zacks Rank and Stocks to Consider
ExlService currently carries a Zacks Rank #3 (Hold).
Investors interested in the Zacks Business Services sector can consider the following better-ranked stocks:
Gartner (IT - Free Report) : The Zacks Consensus Estimate for Gartner’s 2023 revenues indicates 7.9% growth from the year-ago figure. Its earnings are expected to decline 1.9% year over year. The company beat the consensus estimate in each of the four quarters, with the average surprise being 34.4%.
IT carries a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Broadridge Financial Solutions (BR - Free Report) : The Zacks Consensus Estimate for Broadridge’s fiscal 2024 revenues indicates 7.7% growth from the year-ago figure. Its earnings are expected to grow 10.1% year over year. The company beat the consensus estimate in three of the past four quarters and matched once, with the average surprise being 5.4%.
BR currently carries a Zacks Rank of 2.