Earnings Preview: IGATE Corporation

Jul. 6.12 | About: iGATE Corporation (IGTE)

iGATE Corporation (IGTE) provides outsourced information technology (IT) and IT-enabled operations solutions and services worldwide. The company offers various services that include development and maintenance of software application; implementation and support of enterprise applications; package evaluation and implementation; re-engineering; data warehousing; business intelligence; analytics; data management and integration; software testing; IT infrastructure management; business and technology consulting; and enterprise software and systems integration, as well as quality assurance services and product engineering services.

It is scheduled to report its Q2 2012 results on July 13, 2012, before the market opens. In this article I will recap the historical results of the company, latest EPS estimates vs. surprises, latest developments and closest competitors' development.

Technical Overview


The stock has a market capitalization of $1.02B and is currently trading at $17.81 with a 52 week range of $9.32 - $19.97. The stock performance year to date: 13.22%. It is currently trading above 20, 50 and 200 SMA.

Key Metrics

  • Trailing P/E: 45.32
  • Forward P/E: 10.29
  • Price/Sales: 1.05
  • Price/Book: 6.32
  • PEG Ratio: 2.49
  • Total Debt: 832.50M
  • Annual dividend yield: N/A
  • Return on Equity: 11.91%
  • Return on Assets: 8.05%

Recent EPS Actuals vs. Estimates

The company has met or beaten analysts' estimates in the last four quarters. In the last quarter it reported $0.38 EPS, beating analyst estimates of $0.32.

The consensus EPS estimate is $0.29 based on 8 analysts' estimates, up from $0.16 a year ago. Revenue estimates are $268.64M, up from $170.42M a year ago. The median target price by analysts for the stock is $23.00.

Average recommendation: Overweight

Source: Marketwatch

Analyst Upgrades and Downgrades

  • On January 30, 2012, Oppenheimer reiterated Outperform rating for the company.
  • On January 26, 2012, RBC Capital Mkts reiterated Outperform rating for the company.

Latest Developments

  • On June 13, 2012, iGate Corp announced strategic partnership with ADAM Software. Through this partnership, iGATE and ADAM Software will deliver end-to-end digital media management services ranging from business strategy, implementation, support and training to help enterprise-level customers more efficiently manage their digital media assets both locally and globally.
  • On April 9, 2012, Reuters reported that iGate Corp it has accepted minority shareholders' offer of INR520 ($10.18) per share to delist its Indian unit Patni Computer System Ltd., at a price higher than what it paid to buy a controlling stake in the company.
  • On March 27, 2012, Rio Tinto Ltd and iGATE Corp announced that they have entered into a partnership, that will focus on creating technologies and contribute to global growth and development of Rio Tinto's Mine of the Future program.
  • On March 2, 2012, Dow Jones reported that iGate Corp is unlikely to be able to delist Patni Computer System Ltd. from Indian exchanges anytime soon because the high share price will make a buyback too expensive.

Competitors

iGATE Corporation operates in Information Technology Services industry. The company could be compared to CACI International Inc. (CACI), Cognizant Technology Solutions Corporation (CTSH), hiSoft Technology International Ltd. (HSFT), and Infosys Ltd. (INFY). Below is the table comparison of the most important ratios between these companies and the industry.

Below is the chart comparison with the stock price changes as a percentage for the selected companies and S&P 500 index for the last one year period.

IGTE ChartClick to enlarge
(Click to enlarge)

IGTE data by YCharts

Competitors' Latest Development

  • On July 2, 2012, CACI International Inc announced that it has completed its transaction to acquire Delta Solutions and Technologies, Inc., a provider of financial management and business services to the federal government.
  • On June 26, 2012, CACI International Inc announced that it has executed its share repurchase program and has begun to repurchase four million shares of the Company's common stock.
  • On June 21, 2012, CACI International Inc announced that it has signed a definitive agreement to acquire Delta Solutions and Technologies, Inc., a provider of financial management and business analytics services to the federal government.
  • On June 14, 2012, Faruqi & Faruqi, LLP, a national law firm concentrating on investor rights, consumer rights and enforcement of federal antitrust laws, announced that it is investigating potential wrongdoing at CACI International Inc. The investigation focuses on whether certain officers and directors of the Company breached their fiduciary duties by causing or permitting the Company to submit false claims in order to receive federal funds pursuant to a General Services Administration contract.
  • On June 14, 2012, Cognizant Technology Solutions Corp. announced that it has expanded its relationship with ING U.S. to offer a comprehensive array of insurance business process services.
  • On June 14, 2012, Infosys Ltd announced a strategic business alliance with Resonant Software, a company with an underwriting and new business solution for the life insurance industry.
  • On June 14, 2012, Infosys Ltd announced that it has signed a Memorandum of Understanding with The State of Israel, to establish and enhance cooperation in industrial research and development.
  • On June 11, 2012, CACI International Inc announced that it has been selected by the National Institutes of Health Information Technology Acquisition and Assessment Center (NITAAC) to continue its support as a prime contractor on the Chief Information Officer-Solutions and Partners (CIO-SP3) government-wide acquisition contract.
  • On June 6, 2012, CACI International Inc announced that President and Chief Executive Officer Paul M. Cofoni has notified the Company of his intention to retire as of December 1, 2012.
  • On June 6, 2012, CACI International Inc announced that its Board of Directors has authorized the repurchase of four million shares of the Company's common stock. The Company plans to commence this repurchase program in the near term.
  • On June 6, 2012, CACI International Inc announced that it has been awarded two task orders totaling $72 million to provide operations support services for two U.S. Department of Justice divisions: the Justice Management Division and the Criminal Division.
  • On June 6, 2012, CACI International Inc announced that for fiscal 2013, it expects diluted EPS to be in the range of $6.60 to $6.90, net income to be in the range of $160 million to $167 million and revenue to be in the range of $3.8 billion to $4.0 billion.
  • On June 5, 2012, CACI International Inc announced that it has been awarded a $165 million prime contract to support the Department of Defense with procurement initiatives through CACI's Standard Procurement System.
  • On May 29, 2012, CACI International Inc announced that it has been awarded a $23 million task order contract with the Naval Surface Warfare Center Dahlgren Division in Dahlgren, Virginia to provide technical and engineering services to the Submarine Launched Ballistic Missile program.
  • On May 7, 2012, Cognizant Technology Solutions Corp. announced that for the second quarter of 2012, it expects revenue to be at least $1.79 billion, diluted EPS to be $0.80 on a GAAP basis and $0.87 on a non-GAAP basis, which excludes estimated stock-based compensation expense.
  • On May 3, 2012, CACI International Inc announced that for fiscal 2012 it is increasing its GAAP net income guidance the Company provided in February to $163 million to $169 million, as a result of a lower tax rate, lower interest and indirect expense, and the positive impact of the UK acquisition.
  • On April 2, 2012, CACI International Inc announced that it has been selected as one of 13 prime contractors to support the Air Force Medical Service on the Consultant, Advisory, and Technical Services (OTCQB:CATS) contract vehicle.
  • On March 8, 2012, CACI International Inc announced that it has been awarded a $78 million contract to provide integration, sustainment, and deployment services in support of the U.S. Air Force Office of the Civil Engineer's NexGen IT program to replace legacy systems with current technologies.
  • On February 28, 2012, CACI International Inc. announced that it has been awarded a $24 million prime contract to support the United States Central Command with its communications initiatives.
  • On February 27, 2012, CACI International Inc. announced that it has been awarded a $20 million prime contract to provide Occupational Safety and Health Support Services to the Transportation Security Administration.
  • On February 23, 2012, CACI International Inc. announced that it has been awarded a $41 million task order to continue as lead developer of the Defense Agencies Initiative (DAI) solution sponsored by the Defense Logistics Agency.
  • On February 17, 2012, Cognizant Technology Solutions Corp. announced that it has been selected by CentraState Healthcare System, a not-for-profit community health organization, to develop a strategy for transitioning to ICD-10.
  • On February 13, 2012, Cognizant Technology Solutions Corp. announced that it has entered into a five-year, multimillion dollar engagement with Future Group, to provide end-to-end IT infrastructure services for all Future Group companies.
  • On February 8, 2012, Cognizant Technology Solutions Corp. announced that Gordon Coburn has been promoted to President and Karen McLoughlin has been promoted to Chief Financial Officer.
  • On February 8, 2012, Cognizant Technology Solutions Corp. announced that for fiscal 2012, it expects revenues to be at least $7.53 billion and diluted EPS to be at least $3.43 on a GAAP basis, and $3.69 on a non-GAAP basis, which excludes $0.26 of estimated stock-based compensation expense.
  • On February 6, 2012, CACI International Inc announced that it has been selected as one of nine prime contractors to provide a wide range of telecommunications and information technology solutions for the Department of Defense and other federal agencies via the U.S. Government Omnibus Network Enterprise contract.
  • On February 1, 2012, CACI International Inc. announced that it has raised its fiscal 2012 guidance due to its strong second quarter performance and continued confidence in the remainder of fiscal year.

Sources: Yahoo Finance, Google Finance, Marketwatch, Finviz, Reuters.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.