KD - Kyndryl Earnings: Valuation Dilemma Striving For Growth Amidst Challenges

2024-02-07 10:18:17 ET

Summary

• Despite Kyndryl Holdings, Inc.'s improved underlying profitability, I hesitate to pay 18x forward adjusted non-GAAP operating income for a business with limited growth prospects.
• My stance on Kyndryl remains neutral, as its valuation raises concerns, and the stock's recent surge hasn't altered my cautious outlook.
• The balance sheet could get in the way of shareholder returns.

Investment Thesis

Kyndryl Holdings, Inc. ( KD ) delivered fiscal Q3 2024 earnings that saw its stock jump 5% premarket. Accordingly, you'll see that KD has the makings of a strong turnaround. And yet, I charge that there's still a lot of work to be accomplished, even though much progress has already been made in improving its underlying profitability....

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