Ebix Inc (NASDAQ:EBIX) is a financial technology (fintech) stock that has done exceptionally well during the coronavirus pandemic. But Ebix stock hasn’t experienced the kind of ill-gotten stratospheric gains that some other tech stocks have. The stock is up 21.5% year-over-year and 16.6% year-to-date.
Most significantly, however, is the fact that Ebix stock has more than doubled since early November. That triple-digit gain was not the result of investor enthusiasm after the U.S. election. Rather, the stock jumped significantly in early November after the company reported strong third-quarter revenue growth and even stronger earnings growth.
The fact that Ebix Inc’s share price jumped in excess of 30% on the news, continued to climb by an extra 70%, and—as of this writing—is trading at a 52-week high, suggests that investors believe the company’s outlook is bright.
And it is.
Ebix stock trades at 10.33 times its 2021 earnings per share (EPS) estimate and has a price/earnings to growth (PEG) ratio of 1.08.
Analysts following Ebix have a high-estimate target of $75.00, which represents about a 70% gain from the current level. Keep in mind that Wall Street tends to be a little conservative. A 12-month forecast of $85.00 seems more appropriate, which points to an additional 92% upside from the current price.
Chart courtesy of StockCharts.com
Ebix Stock Overview
Ebix Inc provides on-demand software and e-commerce services to insurance, financial, health-care, and e-learning industries in the U.S. and around the world. The company’s software infrastructure makes it easier for companies in these industries to market their products and services online. (Source: “Investor Presentation,” Ebix Inc, last accessed January 22, 2021.)
In the insurance sector, the company’s main focus is to develop and deploy a wide variety of insurance and reinsurance exchanges on an on-demand basis, while also providing software-as-a-service (SaaS) enterprise solutions.
This provides Ebix Inc with a strong recurring revenue stream and a recurring revenue base of approximately 80%.
The company also offers the “EbixCash” online digital platform for domestic and international money remittance, travel, gift cards, utility payments, and other services. It’s marketed in Southeast Asia, including India.
Ebix Inc’s customer base includes thousands of corporate clients and hundreds of thousands of brokers and insurance companies. Ebix’s customers include many of the world’s largest insurance companies.
Q3 Revenue Up 39% Sequentially
In November, Ebix announced that its third-quarter revenue for the period ended September 30 increased 39% sequentially and five percent year-over-year to $154.3 million. On a constant-currency basis, the revenue would have been $5.9 million higher. (Source: “Ebix Q3 Revenues Increase 39% Sequentially and 5% Year-Over-Year,” Ebix Inc, November 9, 2020.)
On a year-to-date basis, cash generated from operations was up 18%, compared to the same period in 2019, at $71.8 million.
Third-quarter operating income increased 23% year-over-year to $31.9 million. Adjusted operating income was $35.8 million.
Ebix Inc reported third-quarter net income of $24.7 million ($0.80 per share), a 20% increase from the $20.5 million ($0.67 per share) in the third quarter of 2019. The company’s adjusted net income was $28.5 million ($0.93 per share).
The company paid out its regular quarterly dividend of $0.075 per share in the third quarter. This translates to an annual yield of 0.7%, with a payout ratio of just 9.7%.
In spite of COVID-19, Ebix Inc was able to increase its overall revenue and report strong earnings growth. Over the last few quarters, the company adjusted its strategy to focus on areas not materially impacted by COVID-19.
The pandemic aside, Ebix has a long track record: two decades of consistency when it comes to key financial metrics such as revenue, operating income, EPS, and cash flow. All of which bodes well for Ebix stock in 2021.
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