This Ebix Earnings Report Could Be Its Most Important Ever
Ebix will release its quarterly report on Friday, and the attention that the insurance-industry technology provider has attracted lately has not been friendly to the company's shares. Yet if Ebix earnings can hold reasonably well despite regulatory scrutiny, it would go a long way toward potentially healing the deep wounds that the controversy has inflicted on shareholders.
Ebix has had a tumultuous second quarter, as the company went from being a takeover target to being the subject of an investigation into allegations of misconduct. Now that it appears that Ebix will remain independent, it's more important than ever for it to demonstrate that it has the same profit potential that gained it so much positive attention in the past. Let's take an early look at what's been happening with Ebix over the past quarter and what we're likely to see in its quarterly report.
Stats on Ebix
Analyst EPS Estimate
Change From Year-Ago EPS
Change From Year-Ago Revenue
Earnings Beats in Past 4 Quarters
Source: Yahoo! Finance.
Will Ebix earnings help the stock bounce back?
In recent months, analysts have dramatically reduced their views on Ebix earnings, cutting June-quarter estimates by $0.14 per share and full-year 2013 projections by more than double that amount. The stock has gotten crushed, falling 42% since early May.
Few companies endure quarters as volatile as Ebix's second quarter. At the beginning of May, the company received a buyout bid from Goldman Sachs , which offered $20 per share for the insurance software company. At that point, shares approached the $20 mark and even briefly eclipsed it as hopeful investors waited for a competing bid.
But then, Ebix's buyout deal fell apart when a U.S. attorney began an investigation into the company, following up on allegations made in previous shareholder class action lawsuits and an SEC investigation. Goldman terminated the merger, and although Ebix CEO Robin Raina stated that the allegations had no merit, shares lost half their value in just two days. Ebix immediately responded with a $100 million share buyback authorization, but that hasn't led to a huge rebound.
Ebix has done its best to move on from the lost Goldman opportunity, announcing a deal last month with Telefonica's Vivo mobile telecom business in Brazil. The deal will help Telefonica/Vivo with its eHealth Self Care business, giving Ebix's Latin American division a chance to offer its products in the fast-growing region.
Just earlier this week, though, more speculation raised controversy about Ebix. The company had to respond to a Bloomberg report by issuing comments about what it called "false and inaccurate assertions," arguing that "allegations of money laundering were false, inaccurate and likely to cause significant financial harm to Ebix shareholders." Shares plunged on the report but regained most of their losses subsequently, but the episode shows how fragile Ebix is right now.
In the Ebix earnings report, watch for signs of how the investigation is going and whether it is affecting the company's core operating business. In the long run, positive results from Ebix will be the only proof investors will accept that the company is a smart investment.
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The article This Ebix Earnings Report Could Be Its Most Important Ever originally appeared on Fool.com.Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Goldman Sachs. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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