Update (4:45 p.m.): Updated with Thursday market close information.
The company reported earnings per share of 45 cents, which surpassed the Capital IQ consensus estimate of 41 cents. Revenue rose 9.9% year over year to $302.2 million, which beat expectations of $300.94 million. Gross margin was 37.5%.
The stock closed up 16.42%, or $5.45, to $38.65 from its previous close of $33.20. Approximately 995,000 shares changed hands, more than triple the average volume of 322,945. iGATE was one of the biggest percentage gainers on Thursday.
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Separately, TheStreet Ratings team rates IGATE CORP as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate IGATE CORP (IGTE) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, reasonable valuation levels, solid stock price performance and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 20.4%. Since the same quarter one year prior, revenues rose by 10.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- IGATE CORP has improved earnings per share by 5.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, IGATE CORP increased its bottom line by earning $1.65 versus $1.12 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus $1.65).
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 77.57% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the IT Services industry and the overall market on the basis of return on equity, IGATE CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full analysis from the report here: IGTE Ratings Report