Ebix records new yearly highs as Q2 results tops estimate

Following record revenues of $72.57 million in the fiscal 2016 second-quarter, the shares of E-commerce solutions provider Ebix, Inc (NASDAQ: EBIX) recorded a new 12-month high of $55.82 on Tuesday. The second-quarter results also beat the revenue and earnings estimate of analysts. Considering the rising demand for insurance related e-commerce solutions, as described below, we believe that the share price would continue to record new yearly highs.

The Atlanta, Georgia-based software provider reported a 12.1% rise in the second-quarter revenue to $72.57 million and topped the analysts’ estimates of $71.20 million. The fiscal 2015 second-quarter revenue was $64.71 million. The company operates under four divisions, namely include Exchanges, Broker Systems, Carrier Systems, and Risk Compliance Solutions (RCS).

The RCS revenue grew 40% y-o- y to $18.66 million. Similarly, the Exchanges revenue increased to $49.32 million, from $46.83 million in the prior year.

Ebix

The quarterly operating income of the company climbed to $23.56 million, from $20.42 million in the prior year’s corresponding quarter. On a y-o- y basis, the operating margin in the second-quarter remained stable at 32%.

During the second-quarter ended June 2016, Ebix recorded net income of $22.99 million, compared to $19.04 million in the similar period of June 2015. The earnings per share for the Q2 2016 were $0.70, against $0.54 per share posted in the Q2 2015. The second-quarter earnings were higher than the Zacks consensus estimate of $0.63 per share.

But for the interest expense of $2.19 million in the Q2 2016, the company’s net income would have been much more impressive. The interest expense in the Q2 2015 was $625,000 only. Similarly, the company incurred a foreign currency exchange loss of $195,000 during the quarter ended June 2016. On the other hand, the company gained $330,000 in the same period last year.

At the end of the second-quarter, the cash and cash equivalents stood at $78.01 million, up from $27.42 million in the corresponding period of 2015. The operating cash flow almost tripled y-o- y to $30.98 million in the second-quarter of fiscal 2016. The impressive operating cash flow reflects an increase in the company’s efficiency.

After consolidating at 48 levels for nearly three months, aided by the impressive second-quarter results, the stock has begun its uptrend. The momentum is positive and rising. Thus, we can anticipate the share price to remain in the uptrend in the weeks to come. From the historic price movements, we forecast the next resistance to rise between 58 and 60.

So, a one touch call option seems to be the suitable contract, which can currently be purchased. The target price for the contract should be about $60. For the recommended contract, the binary trader should also select an expiry date between the 10th and 15th of September.

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