Everyone is selling, the charts are red, but should you panic? Not at all. As a long term investor, my favorite time of the economic cycle is when great stocks sell at an unjustified discount. Today I want to bring to light the market’s darling – WNS (Holdings) Limited. Looking at its size, financial health and track record, I believe there’s an opportunity with WNS (Holdings) during these volatile times.
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WNS (Holdings) Limited, a business process management company, together with its subsidiaries, provides data, voice, analytical, and business transformation services worldwide. Formed in 1996, and led by CEO Keshav Murugesh, the company now has 38.52k employees and with the company’s market cap sitting at US$2.1b, it falls under the mid-cap stocks category. Size matters. The bigger the company is, the more well-resourced it is. The more money it produces from its operations which means it is less reliant on external funding. When times are bad in the market, being self-sufficient is extremely important as you can continue to operate at your own pace. Therefore, large cap companies are a great bet to invest in when you’re heading to the bottom of the cycle.
WNS (Holdings) currently has US$75m debt on its books which requires regular servicing. This means it needs to have sufficient cash-on-hand to meet upcoming interest expenses. With interest income higher than interest payments, meeting these short-term debt obligations isn’t a problem for WNS (Holdings). Moreover, its operating cash flows amply covers its total debt by 164%, above the safe minimum of 20%. Not to mention, it meets the basic liquidity requirement with current assets exceeding liabilities, which further builds on its financial strength in the face of a volatile market.
WNS’s year-on-year earnings growth has been positive over the past five years, with an average annual growth rate of 13%, outperfoming the market growth rate of 12%. It has also returned an ROE of 22% recently, above the industry return of 15%. This continuous market outperformance demonstrates a strong track record of delivering robust returns over many years, raising my confidence in WNS (Holdings) as a long-term hold.
Next Steps:Based on these three factors, WNS makes for a strong long-term investment in the face of a fickle stock market. If you’re a risk averse investor, lining your portfolio with proven companies you’re willing to buy more and more of as the price falls, is a good strategy to build your wealth over the long run. This is the beginning of your research, but before you decide to buy WNS, I highly urge you to understand more about the company, in particular, in these following areas:
- Future Outlook: What are well-informed industry analysts predicting for WNS’s future growth? Take a look at our free research report of analyst consensus for WNS’s outlook.
- Valuation: What is WNS worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether WNS is currently mispriced by the market.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.