3 Major Factors Why G Deserves a Spot on Your Watchlist

Genpact’s Recent Stock Performance: A Closer Look

In the past half-year, Genpact’s stock price has dropped to $37.95, reflecting a 16.5% decline—significantly underperforming the S&P 500, which rose by 6.2% during the same period. This downturn may leave investors questioning their next move.

With shares at a lower level, could this be a strategic moment to invest in Genpact? to learn more.

What Makes Genpact Stand Out to Investors?

Genpact (NYSE: G) began as a spin-off from General Electric in 2005, focusing on business process services. Today, it operates as a global professional services company, supporting organizations in modernizing their operations through digital transformation, artificial intelligence, and data analytics.

Three Key Strengths of Genpact

1. Impressive Long-Term EPS Growth

We monitor long-term earnings per share (EPS) growth to assess whether a company’s expansion is translating into profitability.

Over the past five years, Genpact’s EPS has increased at a compound annual rate of 11.5%, outpacing its revenue growth of 6.5% per year. This indicates that the company has become more profitable for each share as it has grown.

Genpact Trailing 12-Month EPS (Non-GAAP)

2. Strong Free Cash Flow Margin Enhances Reinvestment Ability

While free cash flow isn’t always highlighted in financial statements, it’s a crucial measure since it accounts for all operational and capital expenditures, making it difficult to manipulate. Ultimately, cash flow is essential.

Genpact has consistently delivered solid cash profitability, giving it flexibility to reinvest in the business or return value to shareholders. Over the last five years, its average free cash flow margin was 11.9%, which is notable for a company in the business services sector.

Genpact Trailing 12-Month Free Cash Flow Margin

3. High ROIC Demonstrates Efficient Growth

While growth potential is important, it’s equally vital to consider how efficiently a company uses its capital. Return on invested capital (ROIC) measures how much operating profit is generated for every dollar of capital invested.

Genpact’s average ROIC over the past five years was 18.2%, significantly ahead of its industry peers. This highlights the company’s ability to identify and capitalize on profitable growth opportunities, benefiting shareholders.

Genpact Trailing 12-Month Return On Invested Capital

Our Takeaway

Genpact offers several compelling advantages. With the recent price drop, shares are trading at 9.3 times forward earnings (or $37.95 each). Is this a good entry point? .

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