Ebix Earnings: An Early Look

Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Ebix (NASDAQ: EBIX  ) is one of them. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise.

The insurance industry is a big business, and it requires a lot of moving parts to keep insurance companies working smoothly. Ebix does its part to help with its data exchanges, broker systems, and back-office support for insurance operations. Let's take an early look at what's been happening with Ebix over the past quarter and what we're likely to see in its report on Thursday.

Stats on Ebix

Analyst EPS Estimate

$0.45

Change From Year-Ago EPS

2.2%

Revenue Estimate

$54.3 million

Change From Year-Ago Revenue

23%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Will Ebix keep rising higher this quarter?
Analysts have been cautiously optimistic about Ebix's prospects lately, having pushed estimates up $0.01 per share for the just-ended quarter and by $0.02 per share for full-year 2013. But the stock hasn't shared that enthusiasm, falling about 2% since early December.

Ebix stands on the brink of a huge opportunity. With Obamacare changing the health-insurance landscape, Ebix could benefit as insurance companies seek to take full advantage of millions of new customers seeking mandated coverage. As insurers try to ramp up their offerings, they'll need to rely on outside insurance services to an even greater extent, opening up more growth opportunities for Ebix. That potential may be behind Ebix's decision to reward shareholders with a 50% dividend boost in February.

Ebix also has an impressive stable of customers. Genworth Financial (NYSE: GNW  ) in particular has soared recently due to a recovery in its mortgage-insurance business. With even more extensive networks of agents, brokers, and customers, Manulife Financial (NYSE: MFC  ) and Prudential (NYSE: PRU  ) both count on Ebix to help keep communications streamlined and policyholders satisfied.

Last month, Ebix took a big hit when a report from Gotham City Research attacked the stock. Ebix has managed to survive previous attacks from other research firms, but if Gotham's allegations about failing to disclose related-party loans and alleged unreliable and inaccurate accounting are true, then Gotham's contention that the shares are worth only a third of their current value may be more than just a short-seller talking up its book. Still, Ebix defended itself less than a week later, and shares recovered much of their losses.

In its quarterly report, watch Ebix closely to see if the Gotham City allegations distract it from the much more important task of coming up with strategies to defend itself from potential competitors. In a growing business, Ebix needs to establish itself as the go-to player in order to get maximum growth.

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Read/Post Comments (4) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 13, 2013, at 12:03 AM, Olipso wrote:

    Go breeze through Gotham's "reports" on seekingalpha. You'll find smoke, mirrors, and an unwarranted amount of emotional language. Also, Gotham knows most people don't understand international accounting, so it can make outlandish claims which are difficult to refute: that's Gotham's game.

    Read the comments. There are some very well thought-out rebuttals.

  • Report this Comment On March 13, 2013, at 1:15 AM, TMFVelvetHammer wrote:

    The fact that, in their recent follow-up post on Seeking Alpha included a statement that, and I paraphrase, "we have more info that we may release at any time," versus just releasing said (most likely inexistent) info says plenty to support this as just a short attack. If they had solid info that would rank the stock, they would have already released it.

  • Report this Comment On March 13, 2013, at 8:20 AM, leaderoftheback wrote:

    "we have more info that we may release at any time,"

    this actually points out that EBIX remains vulnerable to short attacks. Be very wary. This is not to suggest that Gotham or Copperfield are real and have any real dirt, but you can already see that having anything real is unnecessary to hammer the share price.

  • Report this Comment On March 20, 2013, at 8:08 PM, fhdfhfhfgh wrote:

    The entire Gotham City attack was a ruse perpetrated by a Twitter trader who used Bloomberg like a tool to widely disseminate false and misleading information which, with respect to the objective accounting claims, was subsequently proven false.

    This trader capitalized off the asymmetry between the fear-driven 'knee-jerk' reaction driven by Bloomberg and the gradual refutation and assimilation of truth.

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