The Only Cookie In The Bag

It’s probably happened to you. A bag of your favorite cookies is on the counter and when you open it, there is just one left inside with some crumbs. That’s sort of what this week’s insider roster is like. There is a bag of buys on the table but just one cookie along with lots of crumbs.

ExlService Holdings, Inc. (EXLS) Directors Garen Staglin and Jayne Studenmund bought a combined 8,925 shares for a total investment of $948,791. (1) In our opinion, other than the EXLS actions, there wasn’t anything else worth at least taste testing in the bag of insider buys.

ExlService is a leading operations management and analytics company that helps clients build and grow sustainable businesses. By orchestrating domain expertise, data, analytics, and digital technology, EXLS looks deeper to design and manage agile, customer-centric operating models to improve global operations, drive profitability, enhance customer satisfaction, increase data-driven insights, and manage risk and compliance.

Since 2006, insiders at the information technology company have sold more the $600 million in stock while buying just $1,311,295. Last week, Staglin and Studenmund accounted for 72% of all insider purchases in terms of dollars.

Director Staglin’s previous action in the EXLS was dominated by selling. He had 18 prior sales and one odd buy where the Director bought and sold the exact number of shares on the same day and at the same price, probably options related. (2) In total, he sold 66,431 shares, collecting nearly $3.4 million in proceeds since August 2013.

Studenmund’s ExlService’s history is limited to a pair of buys. Her first was 2,200 shares at $55.65 in 2018. As we type, the New York City-based company trades at $107.57. (3)

Both of last week’s transactions occurred near the top of the tech company’s 52-week high of $108.13 with Staglin as high as $107.04 and Studenmund’s at $103.38. Meanwhile, Wall Street has a one-year price target below both buys. The street pegs $101.33 as its 12-month target. (4)

Analysts forecast consensus earnings per share (EPS) of $4.43 with revenue hitting $1.16 billion next year. (5) That’s 6% EPS growth and 9.7% sales growth compared to this year’s expectations. The average ExlService’s peer trades with a price to earnings (P/E) of 30.8 compared to 37.48 for EXLS. At the same time, ExlService gets a little discount to the industry’s average price to sales (P/S) valuation, 3.81 versus 4.4. (6)

If we use the peer group P/E and P/S ratios, we arrive at potential price targets of $136.44 and $152.54, respectively. Both numbers are significantly higher than Wall Street’s $101.33 target.

Overview: Based upon forecasted earnings and sales, ExlService Holdings, Inc. (EXLS) could offer investors attractive upside based on the tech company’s industry average price to sales and earnings ratios. It would not be surprising to see analysts lift their price targets if EXLS continues to move higher.

Directors Staglin and Studenmund’s history of trading EXLS shares suggest both expect positive developments. Staglin had a change of heart, as we call it, going from a mass seller to a buyer and Studenmund’s only other buy nearly doubled since.

ExlService Holdings, Inc. (EXLS) shares could be appropriate for aggressive investors with an above average risk tolerance looking to add technology to their portfolios.


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