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By George Leong, B.Comm. Published : November 26, 2020
TTEC Holdings Inc Benefiting from Digital Shift
The rapid shift toward digital technology has been opening opportunities to companies like TTEC Holdings Inc (NASDAQ:TTEC). That, in turn, could lead TTEC stock to continue rising.
TTEC Holdings, which has been around since 1982, provides customer-experience solutions to businesses. The company serves clients on six continents and in 50 languages.
I like the strong tailwinds in the digital space, and view TTEC Holdings Inc as an opportune way to play the global growth of this sector.
A look at the TTEC stock chart shows the stock rallying from its March low in a strong V-shaped rally. The stock has recovered to above both its 50-day and 200-day moving averages, entering a bullish golden cross pattern.
Chart courtesy of StockCharts.com
After drifting in a sideways channel since June, TTEC stock recently broke out at $59.06, to a record high of $66.90. Despite being up about 70% this year, the stock has more to go, especially in the long term.
Strong Fundamentals Bode Well for TTEC Stock
TTEC Holdings Inc has consistently grown its revenues, along with being profitable and generating positive free cash flow (FCF).
The five-year revenue picture is somewhat flat, but the company has managed to report growth in four years straight, to a record level in 2019.
| Fiscal Year | Revenues (Billions) | Growth |
| 2015 | $1.27 | N/A |
| 2016 | $1.28 | 0.3% |
| 2017 | $1.48 | 15.1% |
| 2018 | $1.51 | 1.8% |
| 2019 | $1.65 | 7.9% |
(Source: “TTEC Holdings Inc.” MarketWatch, last accessed November 24, 2020.)
TTEC Holdings is expected to continue growing its revenue, by 14.8% to $1.89 billion this year and by 3.6% to $1.95 billion in 2021. (Source: “TTEC Holdings, Inc. (TTEC),” Yahoo! Finance, last accessed November 24, 2020.)
TTEC has reported positive earnings before interest, taxes, depreciation, and amortization (EBITDA) in the past five years.
| Fiscal Year | EBITDA (Millions) | Growth |
| 2015 | $176.3 | N/A |
| 2016 | $185.9 | 5.4% |
| 2017 | $209.5 | 12.7% |
| 2018 | $189.4 | -9.6% |
| 2019 | $202.5 | 6.9% |
(Source: MarketWatch, op. cit.)
TTEC Holdings Inc has also been consistently profitable based on generally accepted accounting principles (GAAP) earnings per share (EPS), marking a five-year high in 2019.
| Fiscal Year | GAAP Diluted EPS | Growth |
| 2015 | $1.26 | N/A |
| 2016 | $0.71 | -45.6% |
| 2017 | $0.16 | -78.0% |
| 2018 | $0.77 | 393.7% |
| 2019 | $1.65 | 113.7% |
(Source: MarketWatch, op. cit.)
An encouraging sign is that the consensus EPS estimates have been rising for the company, despite the COVID-19 pandemic.
TTEC Holdings Inc is expected to report an adjusted $3.00 per diluted share this year and an adjusted $2.94 per diluted share in 2021. (Source: Yahoo! Finance, op. cit.)
The company has consistently beat the consensus EPS estimates in the last seven quarters, including a 67% beat in the third quarter.
Moreover, TTEC stock has been FCF-positive, with its FCF growing in the last three years, to a record number in 2019.
| Fiscal Year | FCF (Millions) | Growth |
| 2015 | $67.2 | N/A |
| 2016 | $61.0 | -9.2% |
| 2017 | $61.2 | 0.3% |
| 2018 | $124.9 | 104.1% |
| 2019 | $177.2 | 41.9% |
(Source: MarketWatch, op. cit.)
Analyst Take
My bull case for TTEC Holdings Inc is driven by the expected strong tailwinds in the digital customer experience solutions segment.
TTEC stock currently trades at a reasonable 22.8 times its consensus EPS estimate for 2021. The valuation allows the stock some room for multiple expansion and a higher share price.
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