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Ebix 2Q20 schedule plus more Virtu and market thoughts ?4

10:28 03-Aug-20


Ebix has just announced that it will publish its second quarter results this Friday morning, August 7th.  The midpoint of estimates from the two analysts covering the company is 39 cents of EPS from $111M of revenue, rebounding to $131M this quarter.  However, the two differ broadly, at 12 and 65 cents of EPS. 

I've documented the many puts and takes that leave me shading toward the lower end for this report.  Furthermore, India's steps toward a centrally managed economy and the Ebix debt load are real long-term concerns.  I'll be looking for an update on the latter in the wake of the good decision to abort the Yatra purchase, and any update on the ensuing litigation.  The fact that Ebix has only filed in Delaware, to my knowledge, is somewhat encouraging, but any resultant change in Ebix relations with Indian regulators would still be crucial.  Otherwise, broader developments in India could rekindle my long-term interest in EBIX if a severe market reaction brings the stock back around my $17.50 price point, depending on what I hear. 

That said, the pandemic is still a disaster in India and Brazil, and I would rather own a utility like AES, which has declined back towards fair value, than a company like Ebix at current prices.  This is largely because of the relative volatilities and underlying finances in an increasingly concentrated market.  As I commented on Friday, that poses no short-term concern, but it does look like the setup for a 2000-style crash, which is the sort of situation that companies like AES survive, unlike those espousing Ebix-like growth strategies.  Apple's stock split and Google's desperate attempts to diversify are further supporting data points in my eyes.  Those looking to outright profit from such a scenario should still be looking at Virtu, which has just expanded its cost analytics to currencies.  Invest (or not) with the big picture in mind!