Q: What is your assessment of TIXT latest earnings. Why is there such a strong negative market reaction?
5i Research Answer:
Q1 revenue fell 4.2% year over year, to $657M, but this was well short of estimates of $675.5M. EPS was 22c, vs 18c estimated. Net income did double. EBITDA of $153M beat estimates of $140.5M. Year EPS guidance was 93c to 98c, vs 95c estimated. The market reaction seems harsh, but TIXT has missed before and is likely developing a credibility issue with investors. It did beat on several metrics but investors are not happy with the miss nor the decline in sales, in what is supposed to be a recovery play.