Please ensure Javascript is enabled for purposes of website accessibility

Why Syntel Shares Jumped Today

By Evan Niu, CFA - Oct 17, 2017 at 10:37AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Third-quarter results came in strong.

What happened

Shares of Syntel (NASDAQ: SYNT) have jumped today, up by 14% as of 10:45 a.m. EDT, after the company reported fiscal third-quarter earnings. The IT outsourcing posted a healthy beat on both the top and bottom lines.

So what

Revenue in the third quarter fell 4% to $231.3 million, easily ahead of the $218.2 million in sales that analysts were expecting. The company swung to a net profit of $48 million, or $0.58 per share, also topping the consensus estimate of $0.41 per share in profits.

Man holding an illustration of cloud computing between his hands

Image source: Getty Images.

The comparable quarter in 2016 saw a large loss due to a one-time tax expense associated with repatriating foreign cash. Gross margin was 38.1%, and Syntel ended the quarter with $109 million in cash on the books.

Now what

"While we continue to see headwinds in certain areas, the demand for digital services was strong and our Insurance segment continued to post healthy growth," said CEO Rakesh Khanna in a statement. "We are encouraged by our Q3 results, but there is more work to be done. Our customers are at the center of our universe, and this focus will help Syntel return to growth over time." 

Banking and financial services remain the largest segment, contributing nearly 45% of revenue. Syntel's global headcount now stands at 21,928, down from 23,055 a year ago. In terms of guidance, Syntel expects total 2017 revenue to be in the range of $890 million to $902 million, with earnings per share of $1.81 to $1.88, based on an exchange rate assumption of 65 Indian rupees to the U.S. dollar.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.