WNS Q1 Earnings Beat on Higher Revenues, Shares Rally - Analyst Blog

WNS (Holdings) Ltd. (WNS) reported adjusted operating earnings of 39 cents per share for first-quarter fiscal 2015 ending on Jun 30, 2014. Results outperformed Zacks Estimate Consensus of 30 cents and improved 39.3% year over year on higher revenues.

Net income was 23 cents per share, up 77% year over year.

Investors' optimism was reflected in the share price that rallied 8.1% in the last two trading sessions to close at $20.47 on Friday.

Operational Headlines

WNS (Holdings)' total revenue grossed $122.1 million in the quarter under review, increasing 7.3% year over year. Results outperformed Zacks Consensus Estimate by 2.6%.

Cost of revenues increased 2.1% year over year to $86.2 million, while general and administrative  expenses went up 8% to $16.2 million in the quarter.

An increase in revenues more than offset the rise in expenses, thereby driving operating profit improvement by 6.1% to $13.5 million in the quarter.

The company's operating margin expanded 400 basis points year over year to 17.9%, driven by improved productivity and operating leverage due to higher revenues and a favorable exchange rate.

WNS (Holdings) generated strong constant currency revenue growth and increase in operating and net income margins, which stemmed from the growing size of the company's new business pipeline. WNS (Holdings) also added six new logos during the quarter.   

Financial Update

The company exited the quarter with cash and investments of $156.5 million, up 33.2% from fiscal 2014-end level. The company generated $13.2 million of cash from operations and reported $3.9 million as capital expenditure.

Long term debt of WNS (Holdings) was $8.7 million at the reported quarter-end, improving 35.5% from fiscal 2014-end level.

Fiscal 2015 Guidance

WNS (Holdings) expects its top line to increase 6–12% in fiscal 2015 to $501–$528 million.

Operating net income is projected to range between $81–$87 million, representing a 12–20% year-over-year increase.

The company expects adjusted earnings per share in the band of $1.52–$1.63.

Zacks Rank

WNS (Holdings) presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering in the business service industry include ExamWorks Group, Inc. (EXAM), Avis Budget Group, Inc. (CAR) and InnerWorkings Inc. (INWK). While ExamWorks Group sports a Zacks Rank #1 (Strong Buy), Avis Budget Group and InnerWorkings have a Zacks Rank #2 (Buy).