IBEX Ltd (IBEX) stock intrinsic value fair value estimate & owner earnings analysis

IBEX outsources customer service and related digital customer-experience work for other companies. Roughly 35,000 employees handle customer contacts for clients, about 25,400 of them in offshore centers (Philippines, Pakistan, India), 7,100 in nearshore centers (Jamaica, Nicaragua, Honduras) and 2,500 in the United States. The company has more than 65 clients paying it over $1 million a year. The largest client was 9% of fiscal 2026 revenue (11% the year before) and the three largest were 24%. What the business earns. For the year ended June 30, 2026, revenue was $644.1 million, up 15.4% from $558.3 million, and net income was $46.3 million. We measure what owners can actually take out: operating cash flow, less the cash tied up in growing receivables and prepaid items, less stock compensation (treated as a real cost), less the part of equipment spending needed just to stay in business. On that basis owner earnings per share were $0.33, $0.67, $2.06, $2.58, $2.27 and $2.86 for fiscal 2021 through 2026. We anchor on the median of fiscal 2023 to 2026, which is $40.6 million a year. We leave out fiscal 2021 and 2022 because those were years of heavy equipment spending and large receivable build-up while the company was still scaling, and fiscal 2021 has no earlier-year revenue in the data we used to separate growth spending from upkeep. In fiscal 2026 owner earnings were $42.4 million, up 18.9% from $35.7 million. Share count. The company bought back stock heavily, paying $21.6 million, $78.0 million and $14.4 million in fiscal 2024, 2025 and 2026, and diluted shares fell from 18.3 million to 14.8 million over fiscal 2024 to 2026. We value the business on about 14.7 million diluted shares: 13.28 million outstanding at August 31, 2026 plus about 1.4 million of dilution (the gap between diluted and basic shares in fiscal 2026). Base case: about $29.70 a share. Year one owner earnings are $41.8 million, 3% above the $40.6 million anchor and below the fiscal 2026 actual of $42.4 million, so we are not assuming the recent jump repeats. We credit growth of 3% a year for three years, 2% for three years and 1% for four years, stopping at about $49 million in year ten. This is well under the 7.7% a year revenue growth of the last five years (from $443.4 million to $644.1 million), which included a down year in fiscal 2024 (revenue fell 2.8%). We only credit part of that because winning and expanding client programs is repeated work but not contracted. We do not credit margin gains or the company's own new digital products. After year ten we fade earnings in a straight line to zero over the next ten years, because the filing says clients can end contracts for convenience or cut volumes and we can name no contract or moat that keeps earnings running beyond that. Bear case: about $15.40 a share. Owner earnings start at the fiscal 2025 low of $35.7 million and shrink 5% a year for ten years, then fade to zero over five more years. The named reasons are the filing's own statement that generative AI has begun to reduce assisted customer interactions, that clients can terminate for convenience, and that the top three clients are 24% of revenue. Bull case: about $37.70 a share. Owner earnings start at the fiscal 2026 level of $42.4 million and grow 6% a year for five years and 4% a year for five years, near or below the recent revenue pace, reaching about $69 million in year ten, then fade to zero over ten years. This is what happens if client wins and expansions continue at the pace of the last five years, in a business that runs at 94% capacity utilization, with 97% of workstations in lower-cost nearshore and offshore locations. Accounting judgements. We treat the non-cash lease expense and the matching lease payments as offsetting, so neither is counted as working capital. When we cross-check owner earnings against net income plus depreciation and other non-cash items, the small gaps are explained by non-cash revenue reductions for customer warrants ($1.0 million to $1.2 million a year in fiscal 2022 to 2024) and a $1.5 million impairment in fiscal 2024; every year reconciles to within about 4%. Depreciation and amortization of about $19.9 million in fiscal 2026 is added back through operating cash flow. Growth spending was estimated at 3.8% of the revenue increase, the six-year average of equipment spending as a share of revenue. No bank debt was subtracted, consistent with valuing cash flow after interest. What could make this wrong. Our owner earnings exclude receivable and prepaid build-up, which cost $85.2 million of cash over the six years, about $14.2 million a year. In fiscal 2026 receivables and prepaid items absorbed $20.0 million. If that build-up is a permanent cost of growth rather than timing, true owner earnings are lower than our anchor. A loss of a large client, a faster AI-driven decline in call volumes, or a slowdown in the share buybacks that have been shrinking the share count would also hurt per-share value. Margin-of-safety price: $18.00. That is about 39% below the base case and a little above the bear case, because the client contracts can be ended for convenience, the industry is exposed to AI change, and the working-capital question above is unresolved.