WNS (Holdings) Upped to Buy - Analyst Blog

On Dec 5, Zacks Investment Research upgraded WNS (Holdings) Ltd. (WNS) to a Zacks Rank #2 (Buy).

Why the Upgrade?

WNS has been witnessing rising earnings estimates on the back of strong fiscal second-quarter 2014 results and an enhanced guidance for fiscal 2014. Moreover, this business service delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 9.2%. The long-term expected earnings growth rate for this stock is 14.8%.

WNS reported fiscal second-quarter (ended Sep 30) results on Oct 16. Non-GAAP earnings per share came in at 33 cents, surpassing the Zacks Consensus Estimate of 28 cents. Results also surpassed the year-ago earnings of 24 cents by 37.5%.

WNS posted strong, consistent currency revenue growth and expanded operating and net income margins, all of which stemmed from the company's growing new business pipeline.

Based on its progress, WNS (Holdings) expects its top line to grow 6–9% in fiscal 2014 to $464-$476 million. Operating net income is projected to range between $68 million and $72 million or $1.30 and $1.37 per share, representing 28–36% year-over-year increase.

The Zacks Consensus Estimate for fiscal 2014 increased 1.7% to $1.21 per share, as most of the estimates were revised higher over the last 60 days. The current estimate is well below the guidance range provided by WNS. For fiscal 2015, more than half of the estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 3.0% to $3.00 per share.

Other Stocks to Consider

Other stocks worth considering in the business service sector include Competitive Technologies Inc. (CTTC), Core-Mark Holding Company, Inc. (CORE) and Furmanite Corporation (FRM). All these stocks carry the same Zacks Rank as WNS.