Conduent (CNDT) AI Stock Analysis

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Conduent

(NASDAQ:CNDT)

48Neutral

Conduent's overall stock score reflects significant financial challenges, including declining revenues and cash flow issues, coupled with bearish technical indicators. However, strategic efforts in debt reduction and operational improvements provide some optimism. The low valuation may present an opportunity if operational stability is achieved.

Conduent (CNDT) vs. S&P 500 (SPY)

Market Cap

$347.93M

Dividend YieldN/A

Average Volume (3M)1.30M

Price to Earnings (P/E)1.0

Beta (1Y)0.75

Revenue Growth-9.83%

EPS GrowthN/A

CountryUS

Employees56,000

SectorTechnology

Sector Strength57

IndustryInformation Technology Services

Share Statistics

EPS (TTM)2.15

Shares Outstanding161,830,140

10 Day Avg. Volume1,418,873

30 Day Avg. Volume1,298,588

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.15

Price to Cash Flow (P/CF)3.00

P/FCF Ratio2.60

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$7.00

Price Target Upside225.58% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Conduent Business Overview & Revenue Model

Company DescriptionConduent Inc. is a business process services company that provides diversified business process solutions and services to a wide range of industries and government clients. The company operates in sectors such as transportation, public safety, healthcare, and customer experience management. Conduent's core products and services include digital payments, claims processing, benefit administration, customer care, and automated tolling systems, aimed at improving efficiency and reducing costs for its clients.

How the Company Makes MoneyConduent makes money primarily through providing business process outsourcing services and solutions to various industries and government entities. The company's revenue model is based on long-term contracts with clients, which often include fixed fees or transaction-based pricing structures. Key revenue streams include digital payment solutions, healthcare claims processing, customer service operations, and transportation systems management. Conduent also benefits from strategic partnerships with technology and service providers, enhancing its offerings and expanding its market reach. The company's focus on digital transformation and automation further drives its profitability by improving operational efficiencies and delivering value-added services to clients.

Conduent Financial Statement Overview

Summary

Conduent faces significant financial challenges with declining revenues, inconsistent profitability, and cash flow issues. While leverage ratios have improved, the negative free cash flow and declining revenue pose substantial risks.

Income Statement

Negative

Conduent's TTM gross profit margin stands at 33.7%, a healthy level, but the net profit margin is concerning at 12.7% due to past negative net incomes. Revenue has been on a declining trend, dropping from $4.16 billion in 2020 to $3.35 billion TTM, indicating challenges in maintaining sales growth. EBIT and EBITDA margins show some improvement, but overall profitability remains under pressure.

Balance Sheet

Neutral

The debt-to-equity ratio improved to 0.90 in TTM, indicating better leverage management compared to previous years. However, the ROE is positive at 50.8% TTM, but this reflects volatility rather than sustainable profitability. The equity ratio is at 32.3%, suggesting moderate financial stability, but the past high liabilities remain a concern.

Cash Flow

Negative

The free cash flow is negative at -$112 million TTM, highlighting cash generation issues. The operating cash flow to net income ratio is negative due to negative operating cash flow, raising alarm on cash efficiency. The free cash flow trajectory has been erratic, and financing cash flows are heavily negative, pointing to liquidity challenges.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
3.36B	3.72B	3.86B	4.14B	4.16B
	Gross Profit
626.00M	570.00M	840.00M	1.00B	954.00M
	EBIT
2.90B	105.00M	164.00M	96.00M	25.00M
	EBITDA
783.00M	43.00M	187.00M	382.00M	380.00M
	Net Income Common Stockholders
426.00M	-296.00M	-182.00M	-28.00M	-118.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
366.00M	498.00M	582.00M	415.00M	450.00M
	Total Assets
2.60B	3.16B	3.57B	4.04B	4.26B
	Total Debt
753.00M	1.49B	1.47B	1.60B	1.72B
	Net Debt
387.00M	995.00M	890.00M	1.18B	1.27B
	Total Liabilities
1.76B	2.39B	2.65B	2.90B	3.07B
	Stockholders Equity
839.00M	771.00M	917.00M	1.13B	1.19B
Cash Flow		Free Cash Flow
-50.00M	-4.00M	-9.00M	96.00M	22.00M
	Operating Cash Flow
-50.00M	89.00M	144.00M	243.00M	161.00M
	Investing Cash Flow
795.00M	-93.00M	173.00M	-142.00M	-134.00M
	Financing Cash Flow
-877.00M	-81.00M	-131.00M	-132.00M	-74.00M

Conduent Technical Analysis

Technical Analysis Sentiment

Negative

Last Price2.15

Price Trends

50DMA

2.94

Negative

100DMA

3.51

Negative

200DMA

3.64

Negative

Market Momentum

MACD

-0.26

Negative

RSI

32.46

Neutral

STOCH

77.47

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CNDT, the sentiment is Negative. The current price of 2.15 is below the 20-day moving average (MA) of 2.28, below the 50-day MA of 2.94, and below the 200-day MA of 3.64, indicating a bearish trend. The MACD of -0.26 indicates Negative momentum. The RSI at 32.46 is Neutral, neither overbought nor oversold. The STOCH value of 77.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CNDT.

Conduent Risk Analysis

Conduent disclosed 33 risk factors in its most recent earnings report. Conduent reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Conduent Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HCKT	68 Neutral	$709.15M	24.32	28.82%	1.75%	5.82%	-14.46%
Sector *	59 Neutral	$10.74B	10.21	-6.69%	3.04%	7.44%	-10.92%
TTEC	49 Neutral	$208.90M	―	-75.62%	1.37%	-10.32%	-3860.81%
CNDT	48 Neutral	$347.93M	1.00	48.63%	―	-9.83%	―
UIS	44 Neutral	$289.96M	―	192.24%	―	-0.35%	55.51%
TLS	44 Neutral	$202.90M	―	-36.71%	―	-25.52%	-46.44%
XRX	43 Neutral	$523.24M	―	-65.36%	21.03%	-9.70%	-5576.16%

* Technology Sector Average

Performance Comparison

CNDT

Conduent

2.15

-0.91

-29.74%

TTEC

TTEC Holdings

4.23

-3.49

-45.21%

HCKT

The Hackett Group

25.58

4.00

18.54%

UIS

Unisys

4.08

-1.38

-25.27%

XRX

Xerox

4.27

-8.43

-66.38%

TLS

Telos

2.68

-0.89

-24.93%

Conduent Earnings Call Summary

Earnings Call Date: Feb 12, 2025 | % Change Since: -51.03% | Next Earnings Date: May 7, 2025

Earnings Call Sentiment Neutral

The earnings call showcased significant achievements such as debt reduction, improved client retention, and growth in the transportation segment. However, these were offset by revenue declines in key segments, a decrease in adjusted EBITDA, and flat new business sales. Overall, the sentiment is a mix of cautious optimism and challenges ahead.

Highlights

Debt Reduction and Share Repurchase

Through divestitures, the company repaid $639 million of term loans and repurchased 52 million shares, significantly reducing debt and strengthening the balance sheet.

Transportation Segment Growth

The transportation segment's adjusted revenues grew 5% year over year, driven by a 15-point revenue growth from the Australia transit project.

Improved Client Retention

Client retention improved, contributing positively to the net ARR activity metric, which was $92 million for the year.

Expansion in Offshore Capacity

The company added around 2,500 additional seats of capacity in offshore geographies, expected to become available in the first half of 2025.

Lowlights

Decline in Government Segment Revenue

Government segment adjusted revenue was down 10% for the year, with adjusted EBITDA down 35% year over year, due to contract terminations and pricing adjustments.

Overall Revenue Decline

Revenue for 2024 was $3.176 billion, down 4.3% from 2023, slightly below expectations due to discrete drivers.

Adjusted EBITDA Decline

Adjusted EBITDA was $124 million for the full year 2024, compared to $247 million in 2023, with margins at 3.9%.

Flat New Business ACV

New business ACV for Q4 was flat year over year at $137 million, with a 20% decline for the full year compared to 2023.

Company Guidance

During the Conduent Incorporated Q4 2024 earnings call, management provided guidance on several key financial metrics and strategic initiatives. For 2025, the company anticipates adjusted revenues to range between $3.1 billion and $3.25 billion, with expectations of a decrease in the first half and growth in the latter half of the year. Adjusted EBITDA margin is projected to improve to between 4.5% and 5.5%, with an exit rate around 8%. The company aims to achieve net ARR growth through enhanced retention and increased add-on sales, despite a challenging start in 2024. Notably, commercial revenue is expected to grow by 2%, while the government segment is projected to decline by 4%, and transportation to increase by 1%. Capital expenditures are forecasted at approximately $80 million, equating to 2.5% of revenue, and adjusted free cash flow is estimated to be between $0 million and $40 million. The company also plans to continue optimizing its portfolio through divestitures and efficiency initiatives, focusing on strategic assets that align with its growth objectives.

Conduent Corporate Events

M&A TransactionsStock BuybackBusiness Operations and StrategyFinancial Disclosures

Conduent Reports Strong Q4 and 2024 Financial Results

Positive

Feb 12, 2025

On February 12, 2025, Conduent announced its financial results for the fourth quarter and full year 2024. The company reported a revenue of $800 million for Q4 and $3.356 billion for the full year, with notable improvements in adjusted revenue and EBITDA over the last three quarters. Despite a slightly weaker top line due to timing issues, Conduent achieved a high-end EBITDA margin and reported significant gains from divestitures, including a 50% debt reduction compared to 2023. Key strategic moves included divesting several business units and leveraging proceeds to strengthen its financial position. The company also completed a $75 million share repurchase program, indicating confidence in its growth trajectory. Conduent’s industry recognition and leadership were bolstered by multiple accolades, reflecting its commitment to innovation and operational excellence.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.